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INTRODUCTION
Firms create manufacturing capacities for production of goods: some
provide services to consumers. They sell their goods or services to earn profit. They raise
funds to acquire manufacturing and other facilities. Thus, the three most important activities
of a business firm are; finance, production and marketing. firm secures !hatever capital it
needs and employees it "finance activity# in activities !hich generate returns on invested
capital and marketing activities.
Functions of Financial Management:-
The financial functions can be divided into four broad categories:
$nvestment decisions.
Financing decisions.
%ividend decisions.
&iquidity decisions.
1. Investment Decision:-
$nvestment decision or capital budgeting involves the decision of
allocation of capital or commitment of funds to long'term assets, !hich !ould yield, benefits
in future. $t(s one very significant aspect is the task of measuring the prospective profitability
of ne! investments. Future benefits are difficult to measure and cannot be predicted !ith
certainty.
2. Financing Decision:-
Financing decision is the second important function to be performed by
the financial manager. )roadly, he must decide !hen, !here and ho! to acquire funds to
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meet the firm(s investment needs. The central issue before him is to determine the proportion
of equity and debt. The mi* of debt and equity is kno!n as the firm(s capital structure. The
firm(s capital structure is considered to be optimum !hen the market value of shares is
ma*imi+ed.
3. Divien Decision:-
%ividend decision is the third ma,or financial decision. The financial
manager must decide !hether the firm should distribute a portion and retain the balance.
&ike the debt policy, the dividend policy should be determined in terms of impact on the
shareholder(s value. The optimum dividend policy is one, !hich ma*imi+es the market value
of the firm(s shares.
!. "i#uiit$ Decision:-
-urrent assets management, !hich affects a firm(s liquidity, is an
important finance function. -urrent assets should be managed efficiently for safe guarding
the firm against the dangers of liquidity and insolvency. $nvestment in current assets affects
firm(s profitability, liquidity and insolvency. $nvestment in current assets affects firm(s
profitability, liquidity and risk. conflict e*ists bet!een profitability and liquidity !hile
managing current assets.
Financial analysis is the process of identifying the financial strengths and
!eaknesses of the firm. $t is done by establishing relationships bet!een the items of financial
statements vi+., balance sheet and profit and loss account. Financial analysis can be
undertaken by management of the firm or by parties outside the firm vi+., o!ner(s creditors,
investors and others.
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Financial %tatement &nal$sis:-
Financial statements are prepared primarily for decision making. They
play a dominant role in setting the frame !ork of managerial decision. )ut the information
provided in the financial statements is not an end in itself as no meaningful conclusions can
be dra!n from these statements alone. .o!ever, the information provided in the financial
statements is of immense use in making decisions through analysis and interpretation of
financial statements.
Financial analysis is /the process of identifying the financial strengths
and !eakness of the firm by properly establishing relationship bet!een the items of the
balance sheet and the profit and loss amount. There are various methods or techniques used
in analy+ing financial statements, such as comparative statements, trend analysis, common'
si+e statements, schedule of changes in !orking capital, funds flo! and analysis, cost volume
profit analysis and ratio analysis.
Meaning of Financial %tatement &nal$sis:-
T$'es of &nal$sis
(e)tical &nal$sis *o)i+ontal &nal$sis
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The term financial analysis also kno!n as analysis and interpretation of
financial statements, refers to the process of determine financial strength and !eakness of the
firm by establishing strategic relationship bet!een the items of the balance sheet, profit and
loss account and oilier operative data.
$n the !ords of /0yers(,1 financial statements analysis is largely study of
relationship among the various financial factors in a business as disclosed by a single' set of
statements and study of the trend of these factors as sho!n in a series of statements1.

The analysis and interpretation of financial statements is essential to bring out
the mystery behind the figures in financial statements.
Definition of Financial %tatement &nal$sis:-
&cco)ing to M$e)s:-
2Financial 3tatements nalysis is largely a study of relationship among
the various financial factors in a business as disclosed by a single set of the trend of these
factors as sho!n in a series of statements1.
&cco)ing to ,enne$ an Mulle):-
2The analysis and interpretations of financial statements reveal each and
every aspect regarding the !ell'being financial soundness, operational efficiency and
credit!orthiness of the concerned1
Met-os of Financial %tatement &nal$sis:-
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The analysis and interpretation of financial statement is used to determine
the financial position and results of operations as !ell. number of methods or devices are
used to study the relationship bet!een different statements. n effort is made to use those
devices, !hich clearly analy+e the position of the enterprise. The follo!ing methods of
analysis are generally used:
Com'a)ative %tatements.
T)en &nal$sis.
Common si+e statements.
Funs flo. statements.
Cas- flo. statement.
Ratio &nal$sis.
Com'a)ative %tatements:-
The comparative financial statements are statements of the financial
position at different periods of time. The elements of financial position are sho!n in a
comparative form so as to give an idea of financial position at t!o or more periods. ny
statements prepared in a comparative term !ill be covered in comparative statements. From
practical point of vie!, generally t!o financial statements "balance sheet and income
statement# are prepared in comparative form for financial analysis purposes.
4ot only the comparison of the figures of t!o periods but also be
relationship bet!een balance sheet and income statement enables an in'depth study of
financial position a cooperative results. The comparative statement may sho!:
bsolute Figures "5upee mounts#
-hanges in absolute figures i.e., increase "or# decrease in absolute figures.
bsolute data in terms of percentages.
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Com'a)ative Income %tatement:-
The income statement gives the results of the operation 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
analy+e the profitability of the business. &ike comparative balance sheet, income statement
also has four columns. First t!o columns give figures of various items for t!o years. Third
and fourth columns are used to sho! increase is decrease in figures in absolute amounts and
percentages respectively.
Com'a)ative /alance %-eet:-
The comparative balance sheet analysis is the study of the trend of the
same items, group of items and computed items in t!o or more balance sheet of the same
business enterprise on different dates. The changes in periodic balance sheet items reflect the
conduct of a 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. The comparative balance sheet has t!o columns for the
data of original valance sheets. third column is used it sho! increases in figures. The fourth
column may be added for giving percentages of increases or decreases. The balance sheet
sho!s the financial condition of a business at a given point of time.
Com'a)ative %tatements
-omparative $ncome 3tatement -omparative )alance 3heet
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Common- %i+e %tatement:-
The common si+e statements, balance sheet and income statement are
sho!n in analytical percentages. The figures are sho!n as percentages of total assets, total
liabilities and total sales. The total assets ate taken as 677 and different assets are e*pressed
as a percentage of the total. 3imilarly various liabilities are taken as a part of total liabilities.
These statements are also kno!n as component percentage or 677 percent statement because
every individual item is stand as a percentage of the total 677. The short'comings in
comparative statements and tend percentages !here changes in items could not be compared
!ith the totals have been covered up. The analyst is able to assess the figures in relation lo
total values.
Common %i+e Income %tatement:-
n income statement in !hich each account is e*pressed as a
percentages of the value of sales. This type of financial statement can be used to allo! for
easy analysis bet!een companies or bet!een time periods of a company.
Common %i+e %tatements
-ommon si+e $ncome
3tatement
-ommon si+e )alance 3heet
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Common %i+e /alance %-eet:-
company balance sheet that displays all items as percentages of a
common base figure. This type of financial statement can be used to allo! for easy analysis
bet!een companies or bet!een time periods of a company.
Cas- Flo. %tatement:-
-ash flo! is of vital importance to the financial management. $t is an
essential tool of financial analysis for short'term planning. The chief advantages of cash flo!
statement are as follo!s:'
3ince cash flo! statement is based on the cash basis of accounting, it is very useful
in the evaluation of cash position of a firm.
pro,ected cash flo! statement can be prepared in order to kno! the future cash
position of a concern so as to enable a firm to plan and coordinate its financial
operations properly. )y preparing this statement, a firm can come to kno! as to ho!
much cash !ill be generated into the firm and ho! much cash !ill be needed to
make various payments and hence the firm can !ell plan to arrange for the future
requirements of cash.
-ash flo! statement helps in planning the repayment of loans, replacement of fi*ed
assets and other similar long'term planning of cash. $t is also significant of capital
budgeting decisions.
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T)en &nal$sis:-
The financial statements may be analy+ed by computing trends of
series of information; this method determines the direction up!ards of do!n!ards and
involves the computation of the percentage relationship that each statement item bears to the
same item in base year. The information for a number of years is taken rp and one year,
generally the first year, is taken as a bade year. The figures of the base year are taken as 677
and trend ratios for other years are calculated on the bases of base year. The analyst is able to
see the trend of figures, !hether up!ard or do!n!ard.
Ratio &nal$sis:-
8ne of the techniques of analysis of financial statements is to calculate
ratios. 5atio is the numerical or an arithmetical relationship bet!een t!o figures. $t is
e*pressed !hen one figure is divided by another. $f 9777 is divided by 67,777 the ration can
be e*pressed as 9 or ::5 or 97;.

bsolute figures are valuable but they standing alone convey no
meaning unless compared !ith another. ccounting ration inter'relationships, !hich e*ist
among various accounting data< =hen relationships among various accounting data supplied
by financial statements are !orked out, they are kno!n as accounting ratios.
Classification of Ratios:-
5atios may be classified in a number of !ays keeping in vie! the
particular purpose. 5atios indicating profitability are calculated on the basis of the profit and
loss account, those indicating financial position are computed on the basis of the balance
sheet and those !hich operating efficiency or productivity or effective use of resources are
calculate on the basis of figures in the profit and loss account and the balance sheet.
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This classification is rather crude and unsuitable to determine the
profitability and financial position of the business. To achiever this purpose effectively ratios
may be classified as:

0)ofita1ilit$ Ratios:-

>rofitability 5atios are of outmost importance for a concern; these ratios are
calculated to enlighten the end results of business activities, !hich is the sole criterion of the
overall efficiency of a business concern.
?ross profit margin ratio.
4et profit margin ratio
Tu)nove) 20e)fo)mance o) &ctivit$3 Ratios:-

These ratios are very important for a concern to ,udge ho! !ell facilities at the
disposal of the concern are being used or to ratios are usually calculated on the basis of sales
or cost of sales and are e*pressed in integers rather than as percentage. 3uch ratios should be
calculated separately for each type of asset. .igher the turnover ratio, the profitability and
use of capital or resources !ill be. The follo!ing are the important turnover ratios usually
calculated by a concern
5atios
>rofitability
5atio
&iquidity
5atio
&everage
5atio
ctivity
5atios
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$nventory turn over ratio.
$nventory holding period.
"i#uiit$ Ratios:-
These ratios are calculated to ,udge the financial position of the concern from
long'term as !ell as short'term solvency point of vie!. The follo!ing are the ratios, !hich
are calculated in the respect.
-urrent ratio.
@uick ratio.
"eve)age Ratios:-

&everage 5atios to an increased means of accomplishing some purpose. $n
financial management it refers to employment of funds to accelerate rate of return to o!ners.
$t may be favorable or unfavorable. n unfavorable leverage e*ists if the rate of return
remains to ho!ever. $t can be used as a tool of financial planning by the finance manager.
%ebt ratio.
%ebt equity ratio.
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Funs Flo. &nal$sis
3ignificant technique of financial analysis is /Funds Flo! nalysis(. $t
is designed to highlight changes in the financial conditions of a business concern bet!een
t!o points of time !hich generally conform to beginning and ending financial statement
dates. Funds flo! statement is also termed as a statement of sources and applications of
Funds(, /statement of changes in !orking capital, /statement of changes in Financial
>osition(, /statement of Funds supplied and pplied(, /statement of Funds ?enerated and
A*pended(, /!here got and !here gone statement(, funds statement.
lthough financial statements supply useful information to the
management and describe the nature of changes o!nership as a result of the period(s
productive and commercial activities, these statements fail to mirror the funds changes that
have taken place over a given time span. They do not spell out the movements of funds. $t is
more important to describe the sources from !hich additional funds sere derived and the uses
to !hich these funds !ere put, because the ultimate success of a business enterprise depends
on !here got and !here gone situations. The funds flo! statement is, therefore, prepared to
uncover the information !hich the financial statements fail to describe clearly.
Meaning an Conce't of 4Flo. of Funs5:-
The term /flo!( means movement and includes both /inflo!( and
/outflo!(. The term Flo! of funds( means transfer of economic valued from one asset of
equity to another. Flo! of funds is said to have taken placed !hen any transaction makes
changes in the amount of funds available before happening of the transaction. $f the effect of
transaction results in the increase of funds, it is called sources of funds and if it results in the
decrease of funds, it if kno!n as application of funds, further, in case the transaction does not
change funds it is said to have not resulted in the flo! of funds. ccording to the !orking
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capital concept of funds, the term /flo! of funds( refers to the movement of funds in the
!orking capital. $f any transaction results in the increase in !orking capital, it is said lo be a
source or inflo! of funds and if it results in the decrease if !orking capital, it is said to be an
application or out'flo! of funds.
Funs Flo. %tatement:-
The follo!ing are the definitions of funds flo! statement.
&cco)ing to R.N. &nt-on$:-
BThe funds flo! statement describes the sources from !hich additional
funds !ere derived and the uses to !hich these funds !ere put1.
&cco)ing to R.&. Foul6:-
2 statement of sources and applications of funds is a technical devise
designed to analysis the changes in the financial conditions of a business bet!een t!o dates1.
&cco)ing to /ig man:-
2$t is a statement !hich highlights the underlying financial movements
and e*plains the changes of !orking capital from one point of time to another1.
Thus funds flo! statement is a report !hich summari+es the events
taking place bet!een the t!o accounting periods. $t spells out the sources from !hich funds
!ere derived and the uses to !hich these funds !ere put. This statement is essentially
derived from an analysis of the changes that have occurred in assets and liabilities items
bet!een t!o balances sheet dates. $n this statements only the net changes are sho!s that the
outcome of a transaction as of a series of transactions upon the financial condition of a
business enterprise is reflected more sharply.
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%ignificance 2o)3 Im'o)tance of Funs Flo. %tatement:-
The funds flo! statement is an important tool of financial analysis. The
utility of the funds flo! statement items from the fact that it enables management,
shareholders, investors, creditors and other interested in the enterprise to evaluate the uses of
financial policies of the management.
Decisions Relating To Financing:-
=ith the people of the funds flo! statement the analyst can evaluate the
financing patterns of the enterprise. n analysis of the ma,or sources of funds in the past
reveals !hat portion of the gro!th !as financed internally and !hat portion e*ternally. The
statement is also meaningful in ,udging !hether the company has gro!n at too fast a rate,
credit has increased at relatively higher rate, one !ould !ish to evaluate the consequences of
slo!ness in the trade payments on the credit standing of the company and its ability to
finance in future.
Decision On Ca'itali+ation:-
The funds flo! statement serves as handmaid to the finance manager in
deciding the make up of capitali+ations. Astimated uses of funds for ne! fi*ed assets
!orking capital, dividend, and repayment of debt are made for each of several future years.
Astimates are made of the funds to be provided by operations, and the balance must be
obtained by borro!ing or issuance of ne! securities, if the indicated amount of ne! funds
required is greater than !hat the finance manager thinks possible to raise, then plans for ne!
fi*ed assets acquisition and the dividend policies are re'e*amined so that the uses of funds
can be brought into balance !ith the anticipated sources of financing them. $n particular
funds statements are very useful in planning intermediate and long term financing.
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Reveals T-e Reasons Fo) Financial Difficulties:-
The funds flo! statement reveals clearly the cause for the financial
difficulties of the company. The difficulties may be due to improper mi* of short and
long term sources, un necessary accumulation of inventory of fi*ed assets etc., These
can be found out by a careful study of the funds flo! statement.
Useful To t-e 78te)nal 0a)ties:-
The outside parties can have a clear kno!ledge about the financial
policies that the company has persuade. $n the light of the information so supplied by the
statement the outsiders can decide !hether or not to invest in the enterprise and on !hat
terms funds have to be invested. The funds statement provides an insight into the financial
operations of a business enterprise an insight immensely valuable to the finance manager in
analy+ing the past and future e*pansion plans of the enterprise and the import of these plans
an its liquidity. .e can detect imbalances in the issue of funds and undertake remedial
actions.
Useful &s Cont)ol Device:-
The funds flo! statement also serves as a control device in that the
statement compared !ith the budgeted figures !ill sho! to !hat e*tent the funds !ere put to
use according to plan. This enables the finance managers to find out deviation from the
planned course of action and take remedial steps to correct the deviations.
Thus, the funds statement dra!s the attention of finance manager to
problems !hich call for detailed analysis and immediate action. $n vie! of these funds flo!
statement is becoming more popular !ith management. Aven some bank managers make it
obligatory for the borro!ers to furnish a funds statement along !ith their annual balance
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sheet no! a days many $ndian companies are publishing this statement in their annual reports
although they are not obliged to do so under the companies ct.
It *el's In T-e &nal$sis of Financial O'e)ations:-

The financial statements reveal the net effect of various transactions on
the operational and financial position of a concern. The balance sheet gives a static vie! of
the resources or a business and the uses to !hich these resources have been put at a certain
point of time. )ut it does not disclose the causes for changes in the assets and liabilities
bet!een t!o different points of time.
The funds flo! statement e*plains causes for such changes and also
the effect of these changes on the liquidity position of the company. 3ometimes a concern
may operate profitably and yet its cost position may become more and !orse. The funds flo!
statement gives a clear ans!er to such a situation e*plains !hat has happened to the profit of
the firm.
$t sho!s light on many perple*ing question of general interest !hich other!ise may
be difficult to be ans!ered, such as:
6. =hy !ere the net current assets lesser in spite of higher profits and vice'
versa<
:. =hy more dividends could not be declared in spite of available profits<
C. .o! !as it possible to distribute more dividends than the present earnings<
9. =hat happened to the net profit< =here did they go<
5. =hat happened to the proceeds of sale of fi*ed assets or issue of shares<
%ebentures etc.<
D. =hat are the sources of the repayment of debt<
E. .o! !as the increase in !orking capital financial and ho! !ill it be financed
in future<
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$t helps the formation of a realistic dividend policy, sometimes a firm has sufficient
profits available for distribution as dividend but yet it may not be advisable to
distribute divided for lack of liquid of cash resources. $n such cases, a funds flo!
statement helps in the formation of a realistic dividend policy.
It *el's In T-e 0)o'e) &llocation of Resou)ces: -
The resources of a concern are al!ays limited and it !ants to make the
best use of these resources managerial decisions. The firm can plan the deployment of its
resources and allocate them among various applications.
It &cts &s & Futu)e 9uie: '
pro,ected funds flo! statement also acts as a guide for future to the
management. The management can come to kno! the various problems it is going to lace in
near future for !ant of funds. The firm(s future needs of funds can be pro,ected !ell in
advance and also the timing of these needs. The firm can arrange to finance these needs more
effectively and avoid future problems.
It *el's In &'')aising T-e Use of :o)6ing Ca'ital: '
funds flo! statement helps in e*plaining ho! efficiently the
management has used is !orking capital and also suggests !ays to improve !orking capital
position of the firm.
It *el's ,no.ing T-e Ove)all C)eit :o)t-iness of & Fi)m: '
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The financial institutions and banks such as state financial institutions,
industrial %evelopment -orporation, industrial financial corporation of $ndia, industrial
development bank of $ndia etc., all ask for funds flo! statement constructed for a number of
years before granting loans to kno! the credit !orthiness and paying capacity of the firm.
.ence a firm seeking financial assistance from these institutions has no alternative but to
prepare funds flo! statements.
"imitations of Funs Flo. %tatement:-
The funds flo! statement has a number of uses; ho!ever it has certain
limitations also, !hich are listed belo!:
$t should be remembered that a funds ho! statement is not a substitute of an income
statement or a balance sheet. $t provides only some additional information as regards
changes in !orking capital.
$t cannot reveal continuous changes.
$t is not an original statement but simply is arrangement of data given in the financial
statements.
$t is essentially historic in nature and pro,ected funs flo! statement cannot be
prepared !ith much accuracy.

-hanges in cash are more important and relevant for financial management than the
!orking capital.
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-ash flo! statement: a statement of changes in the financial position of firm on cash
basis is called a cash flo! statement.
Rules fo) Funs Flo. &nal$sis:-
The flo! of funds occurs !hen a transaction changes on the one hand a non current
account and on the other current account and vice'versa.
=hen a change in a non current account e.g., fi*ed assets, long term liabilities
reserves and surplus fictitious assets etc, is follo!ed by a change in another non'
current account, it does not amount to flo! of funds.

This is because of the fact that in such cases neither the !orking capital increases nor
decreases. 3imilarly, !hen a change in one current account results in a change in
anther current account it does not affect funds. Funds move from non current to
current transactions or vice'versa only.
$n simple language funds move !hen a transaction affects "i# a current assets and a
fi*ed assets or "ii# a fi*ed and a current liability or "iii# a current asset and a fi*ed
liability of "iv# a fi*ed liability and current liability, and funds so not move !hen the
transaction affects fi*ed assets and fi*ed liability or current assets and current
liability.
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Financial %tatements an Funs Flo. %tatement:-
Financial statement means the profit and loss account and the balance
sheet. ll the organi+ations more particularly, the company from of organi+ations is required
to present the annual financial statements every year. The financial statements differ !ith the
funds flo! statement in many !ays.
Funds Flo! 3tatement is a statement measuring the inflo!s the
inflo!s and outflo!s of net !orking capital that result from any type of business activity
bet!een t!o dates. n $ncome statement in a statement measuring the inflo!s and outflo!s
of net assets of revenue nature that result form rendering goods on services to customers
bet!een t!o dates.
Funds Flo! 3tatements has become a useful tool in the hands of
financial analyst. That is being caused the financial statements i.e., $ncome statement
measures the flo!s restricted to transaction relating to rendering of goods and services to
customers. $t is not capable of any accurate information of the resources from operating
unless the income data is converted into funds data. $t does not depict the ma,or financial
transactions !hich have resulted in changes in )alance 3heet.
Com'a)ison 1et.een Funs Flo. %tatement an Cas- Flo. %tatement:-

The term /Funds( has a variety of meanings. $n a narro! sense it means
cash and the statement of changes in the financial position prepared on cash basis is called a
cash flo! statement. $n the most popular sense, the term /funds( refers to !orking capital and
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a statement of changes in the financial position prepared on tills basis is called a funds flo!
statement. cash flo! statement is much similar to a funds flo! statement as both are
prepared to summaries the causes of changes in the financial position of a business.
.o!ever, follo!ing are the main differences bet!een funds and a cash flo! statement.
Funds flo! statement is based on a !ider concept of funds $.e., !orking capital !hile
cash flo! statement is based in the narro!er concept of funds, i.e., cash only, !hich
is only one element of !orking capital, the other being debtors stock, temporary
investment, bills receivable etc.
Funds flo! statement is based on accrual basis of accounting !hile cash flo!
statements are based on cash basis of accounting. $n cash flo! statement !hile
calculating operating profits, ad,ustments for prepaid and outstanding e*penses and
income are made to convert the data from accrual basis to cash basis, but no such
ad,ustments are required to be made !hile preparing a funds flo! statements.
Funds flo! statement does not reveal changes in current assets and current liabilities,
rather these appear separately in a schedule of changes in !orking capital. 4o such
schedule of change in !orking capital is prepared for a cash flo! statement and
changes in all assets and liabilities fi*ed as !ell as current, are summari+ed in the
cash flo! statement.
-ash flo! statement is prepared by taking the opening balance of cash, adding to this
all the inflo! of cash and deducting the outflo!s of cash from the total. The balance,
i.e., opening balance of cash and inflo!s of cash minus outflo!s of cash, is
reconciled !ith closing balance of cash. 4o such opening or closing balance appears
in a funds flo! statement. The net difference bet!een sources and applications of
funds does not represent cash rather it reveals the net increase or decrease in !orking
capital.
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Funds flo! statement is useful in planning intermediate and long'term financing
!hile as cash flo! statement is more useful for short'term analysis and cash planning
of the business.
0)e'a)ation of Funs Flo. %tatement:-
$n order to prepare funds flo! statement, it is necessary to find out the
23ources and pplications1 of funds.
%ou)ces of Funs:-
Funs f)om O'e)ations:-
fund from operations is the only internal sources of funds. 3ome
ad,ustments are to be made in calculating funds from operations to the net profit given in the
financial statement.
0e)fo)ma of Calculation of funs fo)ms o'e)ations
Ta1le 1.1
0a)ticula)s &mount 0a)ticula)s &mount
To %epreciation 888
)y 8pening )alance of >F&
Gc
888
To ?eneral 5eserve ccount 888 )y >rofit on fi*ed ssets 888
To &oss on fi*ed asset 888
To >rovision for Ta*ation 888
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To -losing )alance of >F&
Gc
888 )y Funds from operations 888
888 888
The follo!ing procedure is to be follo!ed in the calculation of funds from operations.
6. 3tart !ith the 4et >rofit given in the profit and loss account.
:. dd the follo!ing items to the net profit as they do not result in outflo! of funds.
%epreciation on fi*ed assets.
>reliminary e*penses or good !ill etc., !ritten off.
-ontribution to debenture redemption funds, transfer to general reserve
etc., if they have been deducted before arriving at the figure of net profit.
>rovision for ta*ation and proposed dividend. These may be taken as
appropriations of profits or current liabilities for the purposes of Funds
Flo! 3tatement. Ta* or dividends actually paid are taken as applications to
funds. 3imilarly interim dividend paid is kno!n as an application of funds.
ll these items !ill be added back to net profit if already deducted, to find
funds from operations.
&oss on sale of fi*ed assets.
C. %educt the follo!ing items from net profit as they do not increase the funds:
>rofit on sale of fi*ed assets, since the full sale proceeds are taken as a
separate source of funds and conclusion here !ill result in duplication.
>rofit on revaluation of fi*ed assets.
58
4on'operating incomes such as dividend received or accrued rent. These
items increase funds but they are not operating incomes. They !ill be
sho!n under separate heads as 2sources1 of funds1 in the Funds Flo!
3tatement.
$n case the profit and loss account sho!s net loss this should be taken as
an items !hich decrease the finds.
%tatement of C-anges in :o)6ing Ca'ital:-
The increase or decrease in !orking capital can be calculated by
preparing the schedule of changes in !orking capital.
=orking capital represents the e*cess of current assets over current
liabilities. 3everal items of all current assets and current liabilities are the components of
!orking capital. $n order to ascertain the !orking capital at the beginning and at the end of
the period and to measure the increase or decrease therein it is necessary to prepare a
statement or schedule of changes in !orking capital
58
%c-eule of C-anges in :o)6ing Ca'ital of t-e Com'an$ fo) t-e ;ea) 7ne
Ta1le 1.2
>articulars >revious
Hear"5s.#
-urrent
Hear"5s.#
Affect on !orking capital
$ncrease "5s.# %ecrease"5s.#
2&3 Cu))ent &ssets:-
3tock
%ebtors
-ash I )ank
)ills receivable
>repaid e*penses
Total 2&3
2/3 Cu))ent lia1ilities:-
-reditors
)ills payable
8utstanding e*penses

Total 2/3
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
<<< <<<
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
<<< <<<
58
=orking changes:"')#
Inc)ease=ec)ease in
:o)6ing ca'ital
Total
JJJ
<<<
JJJ
<<<< <<<< <<<< <<<<
=hile preparing a schedule of changes in !orking capital it should be noted that.
1.
n increase in current assets increases !orking capital;
decrease in current assets decrease !orking capital;
n increase in current liabilities decreases !orking capital;
decrease in current liabilities increase !orking capital;
$ncreases in current asset and increase in current liabilities does not affect !orking
capital.
decrease in fi*ed assets and fi*ed liabilities affects !orking capital.
2. The changes in all currents assets and current liabilities are merged into one figure only
either an increase or decrease in !orking capital over the period for !hich funds statements
has been prepared. $f the !orking capital at the end of the difference e*pressed as /increase in
!orking capital(. 8n the other hand, if the !orking capital at the end of the period is less than
that at the commencement, the difference is called decrease in !orking capital.
Cu))ent &ssets:-
58
The e*pression /current assets( denotes those assets !hich are
continually on the move since they are constantly in motion, they are also kno!n as the
circulating capital of the business. These assets can or !ill be converted into cash during a
complete operating cycle of the business. -urrent assets include;
stock'in'trade or inventories
debtors
payments in advance or prepaid e*penses
stores
)ills receivables
-ash at bank
-ash in hand
=ork in progress
Cu))ent "ia1ilities:-
-urrent liabilities are those liabilities !hich are to be paid in the near future, i.e.,
during a complete operating cycle of the business. 3uch liabilities include;
Trade creditors
ccrued or outstanding e*penses.
)ills payable.
$ncome ta* payable
%ividends declared;
58
)ank overdraft
Note:-
3ome e*perts are of the opinion that as bank over draft has a tendency to
become more or less a permanent source of financing and hence it need not be included
among current liabilities.
%tatement of %ou)ces an &''lication of Funs:-
Funs F)om O'e)ation:-
$t is an internal source of funds. Funds from operations are to be
calculated as per the method stated above.
Funs F)om "ong Te)m "oans:-
&ong term loans such of debentures, borro!ing from financial
institutions !ill increase the !orking capital and therefore, there !ill be inflo! of funds.
.o!ever, if the debentures have been issued in consideration of some fi*ed assets, there
!ill be no inflo! of funds.
%ale Of Fi8e &ssets:-
3ale of land, buildings, and long'term investments !ill result in
generation of funds.
Funs F)om Inc)ease In %-a)e Ca'ital:-
$ssue of shares for cash or for any other current asset or in discharge of
current liability is another source of funds. .o!ever, shares allotted in consideration of
58
some fi*ed assets !ill not result in funds. .o!ever, it is recommended that such
purchase of fi*ed assets as !ell as issue of securities to pay for them be revealed in
funds flo! statement.
Dec)ease In :o)6ing Ca'ital:-
%ecrease in !orking capital is the result of decrease in current asset or
increase in current liabilities. $n both the cases inflo! of funds takes place. 3uppose
stock, a current asset reduce from 5s.65,777 to 5s.6:,777 the decrease of 5s.C,777 is
assumed to be due to the disposal of stock !hich undoubtedly brings funds into the
business. $n the fame !ay, increase in current liabilities means lesser payment, so
retaining funds is also a source.
0e)fo)ma of Funs flo. %tatements
Ta1le 1.3
0a)ticula)s &mount 2Rs.3
%ou)ces Of Funs:-
$ssue of shares
$ssue of debentures
&ong term borro!ings
3ale of fi*ed assets
K Dec)ease in .o)6ing ca'ital
Total sou)ces
&''lication Of Funs:-
5edemption of redeemable
>reference shares
5edemption of debentures
>urchase of fi*ed assets
>ayment of other long term loans
>ayment of dividends, ta*es, etc
>Inc)ease In :o)6ing Ca'ital
JJJ
JJJ
JJJ
JJJ
<<<
<<<
JJJ
JJJ
JJJ
JJJ
JJJ
JJJ
<<<
<<<
58
Total uses
4ote: K only one !ill be there.
T)eatment of &?ustments:-
3ome times the factors affecting the funds from operations may not be
given in the problems directly and there may be some hidden information. s such, some of
the transactions have to digger out using the additional information provided as ad,ustments
to the balance sheet. These items include: a# provision for ta* "b# proposed dividends "c# sale
purchase of fi*ed assets.
0)ovision Fo) Ta8:-
$t is current liability !hile preparing a funds flo! statement, these are
t!o options available.
>rovision for ta* may be taken as a current liability in such a case, !hen
provision for ta* is made the transaction involves profit and loss appropriation
account !hich is a fi*ed liability and provision for ta* account !hich is a
current liability. $t !ill thus decrease the !orking capital. 8n payment of ta*
these !ill be no change in !orking capital because it !ill in'values one current
liability "i.e., provision for ta*# and the other a current assets "i.e., bank or cash
balance#.
>rovision for ta* may be taken only as an appropriation of profit. $t means that,
there !ill no! change in !orking capital position !hen provision for ta* is
58
made since it !ill involve t!o fi*ed liabilities, i.e., profit and loss appropriation
account and provision for ta* account. .o!ever, !hen ta* is paid, it !ill be
taken as application of funds, because it !ill !hen involve />rovision for ta*
account( !hich has been taken as a fi*ed liability and /bank( !hich is current
assets.
0)o'ose iviens:-
=hatever has been said about the 2provision for ta* is also applicable to
2proposed dividends1. >roposed dividends can also be dealt !ith in t!o !ays;
>roposed dividends may be taken current liability since declaration of
dividends by the share holders is simply a formality. 8nce the dividends are
declared in the general meeting, they !ill have to be paid !ithin 9: days of
theirs declaration. $n case proposed dividends is taken as a current liability it,
!ill appear as one of the items decreasing !orking capital in the schedule of
changes in !orking capital. $t !ill not be sho!n as an application of funds
!hen dividend is paid later on.
>roposed dividends may simply be taken as an appropriation of profits. $n
such a case proposed dividend for the current year !ill be added back to
current year(s profit in order to find out funds from operations if such amount
of dividend has already been charged to profits. >ayment of dividend !ill be
sho!n an 2application of funds1.
%ale O) 0u)c-ase Of Fi8e &ssets:-
For arriving at the final figure !e have to prepare the asset account,
depreciation account, assets sold as purchased account. This can be illustrated !ell !ith the
follo!ing e*tracts of the balance sheet.
58
&sset &ccount 20lant &n Mac-ine)$ &ccount3:-
This is maintained at the cost price. The accounts is debited !ith the
cost of the machinery as at the beginning of the year "i.e., balance in the machinery
account at the beginning# and !ith purchases during the year. $t is credited !ith the
cost price of the machinery sold and !ith cost of the machinery as at the close of the
year "i.e., balance in the machinery account at the end#. $n the problems either the
total value of purchases during the year may be missing or the cost of the machinery
sold may be missing. The missing figure can be found out by feeding the account
!ith the available information and balancing it.
De')eciation &ccount:-
%epreciation is not source of funds. 3ource of funds is constituted by
those transactions, !here one account belongs to current category and the other is longs
to non'current category. $n case of depreciation both items belong to non'current
category, as such it does not make any change in the funds and is not a source of funds. $n
support of the ans!er ,ournal entry regarding depreciation is presented here!ith.
>rofit and loss account is a non'current liability and fi*ed assets are
non'current asset. s both of them belong to non'current category, so depreciation is not a
source of funds.
&sset %ol &ccount:-
The purpose of preparing this account is to ascertain the profit or loss
made on sale of the asset. The account is debited !ith the cost of the assets sold "transferred
from the asset account#. $t is credited !ith the accumulated depreciation on the asset sold
"transferred from depreciation account#. $t is also credited !ith the money received on sale of
the machinery. The difference bet!een the t!o sides !ould be profit "if credit balance or loss
"if debit balance#.
58
O/@7CTI(7% OF T*7 %TUD;
To present a theoretical frame!ork relating to funds flo! analysis.
The main ob,ective of the study is to analy+e the financial information of
the Tirumala milk products private limited.
To evaluate the liquidity position of Tirumala milk products private
limited
To understand the operating efficiency of Tirumala milk products private
limited.
To determine the financial status of the company and analy+e them.
58
To make pertinent suggestions for the effective management of funds
flo! analysis of Tirumala milk products private limited.
M7T*ODO"O9; OF T*7 %TUD;
0ethodology is a systematic process of collecting information in order
to analy+e and verifies a phenomenon. The collection of data is t!o principle sources. They
are discussed as
>rimary data
3econdary data
0)ima)$ Data:-

The primary data needed for the study is gathered through intervie!
!ith concerned officers and staff, either individually or collectively, sum of the information
has been verified or supplemented !ith personal observation conducting personal intervie!s
!ith concerned officers of finance department of ATIRUM&"& MI", 0RODUCT%
0RI(&T7 "TDB.
%econa)$ Data:-

58
The secondary data needed for the study !as collected from published
sources such as, pamphlets of annual reports, returns and internal records, reference from te*t
books and ,ournal management.
Fu)t-e) ata neee fo) t-e stu$ .as collecte f)om:'
-ollection of required data from annual records of the company.
5eference from te*t books and ,ournals relating to financial management.
Diag)ammatic Re')esentation of Resea)c- Met-oolog$
Diag)am 2.1
D&T&
%OURC7
%
>rimary
3ources
3econdary
sources
0anagement 5espondents
>ersonal
8bservance
$nside The
-ompany
8ut 3ide the
-ompany
nnual
5eports
Te*t books
Lournals
58
N77D OF T*7 %TUD;
The main need of the study is to analyses the financial information of the
Tirumala 0ilk products private limited.
To find out the liquidity or short term solvency of the Tirumala milk
products private limited.
To kno! the different types of funds flo! analysis and ho! it sho!s
impact on different organi+ations.
To allo! the relationship among various aspects in such a !ay that it
allo!s dra!ing conclusion about the performance, strengths and
!eaknesses of the company.
58
To kno! the short term servicing ability of the company.
%I9NIFIC&NC7 OF T*7 %TUD;
This study is useful to the management, o!ners, investors, government,
employees, suppliers and society.
This study is useful to the research scholars !ho conduct in depth
research.
This study is useful to the similar organi+ation in assessing their financial
performance.
This study provides on insight into the various aspects financial statement
analysis ..ence the company can make the necessary changes in the
policy relating to it.
This study is also useful to competitors to make necessary. 3teps to
improved financial statement analysis.
58
"IMIT&TION% OF T*7 %TUD;
s the time spent on pro,ect is only D !eeks, it is not possible to go into
detail study.
3ince the current year !as not completed it !as not possible to compare
the current year information !ith the previous information.
3ome of the information !as !ith registered office of the company due
to some statutory requirements so it became difficult to get the overall
information of the company.
3ince !e are ne! to the company, company refused to provide its
financial information.
58
The funds flo! contains historical information. This in formation is
useful; but an investor should be concerned more about the present and
future.
The collected information is mainly through secondary data.
INDU%TR; 0ROFI"7

%airying has been of life in $ndia since the ancient times. The modern
diary $ndustry took roots in 6M57 !ith the sale of bottled milk in )ombay from rray milk
colony. The first large scale milk products factory !as started in 6M95 at nand a -o'
operative venture, !ith the assistance of N4$-AF, for the production of milk po!der, table
butter and ghee. These products !ere making from the buffalo milk.

The !orld(s largest development program over undertaken, the
operation flood undertook and gigantic task of upgrading and moderni+ing !ith production,
procurement, processing and marketing !ith the assistance provided by the =orld )ank and
other e*ternal agencies, designed and implemented by the 4ational %iary %evelopment
)oard "4%%)# and the $ndian %iary -orporation. The pro,ect !as launched in Luly, 6ME7. $ts
basic concept compromises the establishment of co'operative structure on nand pattern.
The popular adage 2nothing succeeds like success1 is applicable to the
dairy development in $ndia. $f the country !itnessed the 2green revolution1 leading to self'
reliance in food grains in the si*ties and the seventies, the decades of the eighties and the
nineties !itnessed the 2!hite revolution1. $ndian total milk production is ranked first in the
58
!orld follo!ed by the Nnited 3tates. $nitially dairying !as largely an unorgani+ed activity.
)y and large land holding farmers kept cattle mainly for bullock production. 0ilk !as
essentially a byproduct. The surplus after domestic consumption !as either converted into
conventional products mainly ghee and sold to middle men !ho cater to the needs of the
market.

s $ndia enters an era of economic reforms, agriculture, particularly the
livestock sector, is positioned to be a ma,or gro!th area. The fact that dairying could play a
more constructive role in promoting rural !elfare and reducing poverty is increasingly being
recogni+ed. For e*ample, milk production alone involves more than E7 million producers,
each raising one or t!o co!sGbuffaloes. -o! dung is an important input as organic fertili+er
for crop production and is also !idely used as fuel inn rural areas. -attle also serve as an
insurance cover for the poor households, being sold during times of distress

There !as an increasing demand for milk from the urban areas. There
arose a need for the farmers to increase the production of milk. 3ince the demand in the
urban scenario is rapidly increasing so do the farmers generate the supply< Further the ne!
dairy plant capacity approved under the 0ilk and 0ilk products order "00>8# has
e*ceeded 677 million lGpGd. The ne! capacity !ould surpass the pro,ected rural marketable
surplus of milk by about 97 percent by :775.
*I%TOR;
The origin of dairy farms under public management dates back to 688D
!hen the department of %efense established a fe! dairy farms in that year to supply milk and
milk products to the )ritish troops. The ne*t step !as initiated during the First =orld =ar.
58
$n 6M69, the %epartment of %efense on the advice of the )oard of
griculture advised the ?overnment in 6M6D, to appoint imperial dairy e*pert. The ne*t
important step !as the decision to conduct a census of livestock. The )oard of griculture
carried out the livestock census in 6M6M as a preparatory action for planned dairy
development. $n 6M:7, the imperial e*pert recommended to the ?overnment for the
establishment of a training center to meet the manpo!er requirements for managing the
%efiance %airy Farms. )y this time there !ere three dairy farms and until 6M:C the )ritish
?overnment(s approach to!ards dairying !as confined to milk requirements of the military
only. fter 6M:C, diploma course in dairy !ere started at )angalore.
%r. 4.-. =right, %irector, %airy 5esearch institute, 3cotland !ho !as
invited to $ndia in 6MCD for revie!ing the progress of dairying in the country has made t!o
recommendations: '
$ndustry needs have to be solved by developing o!n technology and technologists in
the country.
$ndia is country of villages, of !hich most inhabitants are small, marginal farmers
and landless laborers. %evelopment should be promoted only on co'operative lines.
$n 6MCE, the &uck no! 0ilk producer(s co'operative Nnion limited !as
established paving the !ay for the organi+ation of such union in districts and state.

$n 6M95, the Famine enquiry commission in its report emphasi+ed the
need for developing fodder supply for increasing milk production and recommended the
adoption of mi*ed farming !ith a place for fodder and crop rotation. s a sequel to this,
under the ?reater )ombay 0ilk 3cheme, milk !as procured from kaira district, ?u,arat by
the private dairy. That gave !ay to the idea of creating an institutional structure for dairying
on co'operative lines.
58
Develo'ments of Inust)$:-
National Dai)$ Develo'ment /oa) 2NDD/3 :'
The ?overnment of $ndia had established the 4ational %airy
%evelopment )oard "4%%)#, an autonomous body headquartered at nand(s -o'operative
in $ndia. $n order to develop dairy in $ndia, 4%%4 dre! plans for /operation flood(.
O'e)ation Floo:-
$n the late si*ties, the board dre! up a pro,ect called 8peration
Flood "8F# I meant to crate a flood of milk in $ndia(s villages !ith funds mobili+ed from
foreign donations. >roducer(s co'operatives, !hich sought to link dairy development !ith
milk marketing, !ere central plank of this pro,ect. The 8peration Flood, !hich started in
6ME7, concludes its third phase in 6MMD and has to its credit these significant results:'
The enormous urban market stimulus has led to sustained.
>roduction increases, raising per capita availability of milk to early :77 grams per
day.
The dependence on commercial imports of milk solids are alone a!ay !ith.
0oderni+ation and e*pansion of the dairy industry and its infrastructure, activating
milk grid.
58
0arketing e*panded to supply hygienic and fair priced milk to some C77 million
consumers in 557 cities and to!ns.
nation!ide net!ork of multi'tier producer(s co'operative, democratic in structure
and professionally managed, has come into e*istence. 0illions of small producers
participate in an economic enterprise and improve the quality of their life and
environment.
%airy equipment manufacture has e*panded to meet most of the industry(s needs
T-)ee 0-ases of Develo'ment
The scheme sought to establish milk produces co'operatives in the
villages and make modern technology available to them. The broad ob,ectives are to increase
milk productions "2a flood of milk1# augment rural incomes and transfer to milk producers
the profits of milk producers the profits of milk, marketing !hich are hitherto en,oyed by
!ell'to'do'middlemen.
0*&%71:-
>hase 6 of 8peration Flood !as financed by the sale !ithin $ndia of skimmed
milk po!der and butter oil gifted by the A- countries via the !orld food program. s
founder'chairman of the 4ational %airy %evelopment )oard "4%%)# of $ndia %r.Ourien
finali+ed the plans and negotiated the details of AA- assistance. .e looked after the
administration of the scheme as found'chairman of the erst!hile $ndian %airy -o'operation,
the pro,ect authority for 8peration Flood. %uring its first phase, the pro,ect aimed at linking
$ndia(s 68 best milk sheds !ith the milk markets of the four metropolitan cities of %elhi,
0umbai, -alcutta and 0adras.
0*&%72:-
58

>hase : of the pro,ect, implemented during 6M86'85 raised this to some 6CD
milk sheds linked to over :M7 urban markets. The seed capital rose from the sale of
=F>GAA- gift products and =orld )ank loan had created, by end 6M85, a self'sustaining
system of 9C,777 village(s co'operatives covering 9.:5 million milk producers. 0ilk po!der
production !ent up from ::,777 tons in the pre pro,ect year to 6, 97,777 tons in 6M8M, thanks
to dairies set up und 8peration Flood. The AAP gifts thus helped to promote self'reliance.
%irect marketing of milk by producer(s co'operatives resulting inn the transfer of profits
from milk contracts increased by several million liters per day.
0*&%73:-

>hase C of 8peration Flood "6M85'6MMD# enabled dairy co'operatives to rapidly
build to the basic up the basic infrastructure required to procure and market more and more
milk daily. Facilities !ere created by the co'operatives to provide better veterinary first'aid
health care services to their producer(s members.
&nan 0atte)n Dia)$ Develo'ment
The information nand pattern of milk co'operative !as launched !ith the
organi+ation of Orishna %istrict -o'operative 0ilk producers Nnion &imited. $n this pattern
the function of diary is milk procurement, processing and marketing are controlled by the
milk producers themselves.
0lanning Investment:-
CC.9C -rores
58
:9E.5C -rores
68E.77 -rores
C9M.77 -rores
66D.77 -rores
D77.77 -rores
Dai)$ Inust)$ in &n-)a 0)aes-:-
The program %airy $ndustry !as mooted !ith commendable
help of the Nnited 4ational $nternational -hildren(s Amergency Fund, Food and griculture
8rgani+ation and Freedom from .unger -ompany campaign organi+ation of the N.O. These
organi+ation insisted a lot of the establishment of the dairy units at .ydria and Pi,aya!ada in
6MDE and 6MDM respectively, !hich lead to pioneer dairy development in ndhra >radesh later
to set cooling and chilling centers have been setup to feed these t!o gigantic units.
The ?overnment of ndhra >radesh started dairy development
corporation to interest of milk producers and ensuring adequate supply of fresh milk at
reasonable price to the urban consumers as .>.%.%.-., come in to the e*istence on :
nd
pril
6ME9. .>.%.%.-., providing employment to nearly :7 employees and organism easy many as
8E dairy units including seven milk factories, 6C district dairies, :: chilling centers, 68
cooling centre and 65 mini cooling centers.
$n addition to that the private units have been contributing their
little mite in the development of dairy industry 0Gs. .industan milk foods that has started a
malted milk product factory in 5a,ahmundry. Further to enhance !orking efficiency and to
58
increase the turnover, the ?overnment has constituted on autonomous dairy development.
-orporation on the recommendation measure the dairy industry improving to!ards massive
milk production and milk collections.
Dai)$ Develo'ment:-
$n 6MD7 pilot milk supply scheme !as started in the state for the dairy
development. $ts initial capacity !as 677 liters a day in the time of starting. 4o! its daily
collection increased to 66 lakhs liters per day. $t is also !orking as alien bet!een milk
producers of the to!ns by providing reasonable price to the producers to maintain stable
market.
&.0. Dia)$ Develo'ment Co-O'e)ative Fee)ation 2&.0.D.D.C.F3:-
.>.%.%.-.F. !as formed in 8ctober,6M86 to implement 8peration
Flood': program through active involvement of producers in organi+ation milk production,
procurements, processing and marketing on 2three'tier1. -o'operative structure as per the
4ational ?overnment of $ndia. The three'tier system consists of primary dairy co'operatives
societies( 6C village level, co'operative unions at district level and federation at state level.
O'e)ation Floo:-
58
$n our state operation flood !as divided in three types
2nand &evel1.
Pillage &evel ' %.-.3.
%istrict &evel ' 0.>.-.P.
3tate &evel ' .>.%.%.-.
O'e)ation Floo 0)og)amme):-
$ndian diary %evelopment -orporation o!n the responsibility of
implementation of operation flood programs, !hich provides money assistance, put E7 ;
to!ards loans and C7 ; as subsidy. 4ational %iary %evelopment -orporation selected
district of the 3tate for implementation of operation fold.
Develo'ment of Dai)$ in Nineties:-
The momentum gained in the dairy through co'operatives during the
last :7 years !ill no! take $ndia into nineties as ma,or dairying country of the !orld. The
country(s milk production in the early si*ties !hich !as about :7 million tons has touched a
record of 5D million tons. $t is likely to reach about 87 million tons by :777 %. $ndia !hich
one time !as dependant on other countries for products such as milk po!der, table butter and
cheese has no! become self sufficient. $t has even started e*porting some of them in small
quantities simultaneously efforts are made to e*pand milk procurement, processing and
marketing to meet the gro!ing demand for milk products.
58
9)o.t- of t-e Inust)$:-
)efore the independence of $ndia, in the first half of the :7
th
century
dairying in the country !as largely unorgani+ed. Fluid milk and its products !ere generally
not easily marketable commodities and there !as no transport of these products to far
distances. 8rgani+ed dairying, as !ell understood in the !est started in a small !ay !hen
military dairy farms and creameries !ere established to!ards the end of the :7th century to
meet the demands of the armed forces and their hospitals. 3ome private dairies, such as
Oaveters and poisonsQ !ith encouraged making pasteuri+ed butter, primarily for the use of the
)ritish army. s a result the imperial institute of animal .usbandry and dairying !as
established in 6M:C at )angalore. There has been another ma,or effort in the early 6M97Qs
!here milk produced in rural areas of kaira district !as collected in bulk >asteuri+ed and
transported by distributing in )ombay by B the )ombay milk schemeB operated by the
)ombay municipality. =hen $ndia become independent in 6M9E, one of the ma,or milk
schemes to be included the country !as Bthe ?reater )ombay milk scheme "?)03#B.
Mil6 %-es=Unions:-
8peration flood programmer has been identified into milk shedsGunions.
T&/"7 3.1
NO MI", %*7D% = UNION% DI%TRICT%
6 Pisakha 3rikakulam, Pi+ianagaram, Pi+ag
: ?odavari Aast and =est ?odavari
C T$5N0& T$5N0&
9 ?untur'>rakasam ?untur'>rakasam
5 -hittoor -hittoor
D -uddapha -uddapah
E Ournool Ournool
8 4algonda'5anga 5eddy 4algonda'5anga 5eddy
M 0edak'4i+amabad 0edak'4i+amabad
58
COM0&N; 0ROFI"7

T$5N0& 0$&O >58%N-T3 >rivate &imited is a professionally managed
company engaged in the manufacture of a !ide range of %airy >roducts !hich include 0ilk
in 3achets, 3!eets, Flavored 0ilk, -urd in -ups and 3achets, 0ilk >o!der, )utter, ?hee and
)utter 8il both in bulk as !ell as in consumer packs...
Astablished in 6MM8, T$5N0& 0$&O >58%N-T3 "># &td. is one of the
fastest gro!ing >rivate 3ector Anterprises in $ndia !ith a team of dedicated professionals.
The company has one of the most modern and versatile plants in the $ndian %airy $ndustry
!ith state'of'the'art technology. T$5N0& 0$&O >58%N-T3 "># &td. >roducts meet
stringent quality control tests and cater to the premium segment of the market for %airy
>roducts. T$5N0& 0$&O >58%N-T3 "># &td. is presently implementing an e*pansion
programme and proposes to launch ne! products in the near future.
>resently T$5N0& 0$&O >58%N-T3 market presence in ndhra
>radesh, Oarnataka and Tamil 4adu. $t handle 6C &akh liters of milk per day in packing
stations and dairy plant, !hich is the single largest plant in the state of ndhra >radesh. $ts
5egistered 8ffice is located at 4arasarao>et, ?utur %ist and -orporate 8ffice is located at
Oavurihills, .yderabad.
58
T$5N0& 0$&O >58%N-T3 "># &td. sells a rich, varied offering of
nutritious, tasty and healthy food products under !ell'kno!n brand. Taste, health,
convenience, reliability and vitality for consumers are key characteristics. 0ilk comes from
cattle herd that receive the best care along !ith healthy and nutritious diet in the form of
quality feed to ensure that they produce !holesome, high'quality milk. The ma,or
contributors to the success of T$5N0& 0$&O >58%N-T3 "># &td. are:'
Mil6 0)ocu)ement Net.o)6
%u'e)io) sales an ma)6eting ')o.ess
%t)ategic tec-nological C inf)ast)uctu)al avantage
7fficient -uman investments
/)ief Int)ouction a1out Com'an$:-
=e have established a dairy unit named Tirumala 0ilk products "># &imited, at
Oadivedu Pillage, -hillakur 0andal, 4ellore %istrict, ndhra >radesh and commissionered
for commercial production for mareting during sepetember 6MMM to handle :,:5,777 litres of
milk per day. The plant is located on -alcutta'-hennai 4ational .igh !ay, Mkms from ?udur
to!n to!ards -hennai, in an are of 6C.77 acres.
Ince'tion
(ision
Mission
0olicies
1. Ince'tion:-
The unit is registered under 3.3.$. The milk is bulk is being purchased from
other dairies processed, homogeni+ed, packed and marketed mainly in -hennai, )angalore
58
and 0ysore cites. The milk is being also sold in ?uduru, Tirupathi and 4ellore to!ns basing
on consumers( demand. )y marketing the milk in various to!ns, assured market. 8ut let is
provided to large number of village milk producers for their surplus are applied before
machinery is installed in the dairy. 3trict quality standards are applied before marketing the
milk for !hich !ell equipped laboratory is established. $n order to deliver quality milk to the
consumers insulted trucks are used to transport milk from the dairy to various destinations.
2. (ision:-

Tirumala 0ilk >roducts "># &imited is a dream come true to the dynamic
young entrepreneurs !ho have ,ointly effected to convert their skills, kno!ledge and
e*perience in the field of processing and producing milk and milk products.

5eali+ing the 0ilk >roduct >otentialities of the inversion track of the
?overnment of ndhra >radesh and ?overnment of $ndia, !ith self managed financial
resources and established the Tirumala %airy in the year 6MM5 at 4arasaraopet, ?untur
%istrict and erected ne! plant at Oadivedu in the year 6MMM. Today, the dairy has pods to
equate ma,or dairies into eh southern region !hich has not only captured the market but also
has mode 2Tirumala1 an accepted )rand and preference of the consumers.
3. Mission:-
Tirumala 0ilk >roduct "># &imited is a dream come true to the dynamic young
entrepreneurs !ho have ,ointly afforded to convert their skills, kno!ledge and e*perience in
the field of processing and producing milk products.
!. 0olicies:-
58
5eali+ing the milk product potentialities of the inversion track of the
?overnment of ndhra >radesh and ?overnment of $ndia, !ith self managed financial
resources and established the Tirumala %airy in the year 6MM5, at 4arasaraopet %istrict,
?untur and erected ne! plant at Oadivedu in the year 6MMM. Today, the dairy has posed to
equate ma,or dairies in the southern region !hich has not only captured the market but also
has mode 2T$5N0&1 an accepted )rand and preference of the consumers.
O)gani+ation C-a)t:-
T$5N0& 0$&O >58%N-T3 "># &td. has a seasoned )oard
of %irectors !ith a collective blend of visionary leadership, consumer marketing e*pertise
and technological pro!ess.
Diag)am 3.1

58
/./)a-ma Naiu - Managing Di)ecto)
D./)a-mananam - @oint Managing Di)ecto)
/.Nages.a)a Rao - Di)ecto)
D). N.(en6ata Rao - Di)ecto)
7.N.Rao - 78ecutive Di)ecto)
R. s)inivasa Rao - 9ene)al Manage)
C-. Malli6a)?una Rao - Financial Manage)
&)eas of O'e)ation:-
Tirumala distributes milk to various parts of Tamil 4adu, ndhra >radesh, and
Oarnataka. ?udur is the main source for delivering milk and milk products to -hennai and
other ma,or parts of Tamil 4adu. The procurement and processing section located at
>asupattur village of -hitoor district in ndhra >radesh is the source of milk, curd and
products !hich are supplied in )angalore and 0ysore 0arkets. The packing station located
at Pellacheruvu, :7 O0 a!ay from 5egistered 8ffice and plant at 3ingavaram =est
?odavari %istrict, =adiyaram in 0edak %istrict and ?unagal in 5angareddy %istrict supplie
milk curd and other products to ma,or markets of ndhara >radesh !hich includes
58
.yderabad, Pi,aya!ada, ?untur, 5a,amandry, Oakinada, Pisakhapatnam, 0ahabubnagar and
Oarim 4agar. 3kim 0ilk >o!der, )utter and )utter oil produced at ?udur plant are supplied
to ma,or $ndustrial and $nstitutional customers located across $ndia.
Ce)tificates an &.a)s:-
$n recognition of its efforts and achievements in the dairy foods industry, and in
ackno!ledgment of all the challenges surmounted, T$5N0& 0$&O >58%N-T3
"># &td. has !on many a!ards and certificates.
0ore enduring than any public recognition for our contributions is the satisfaction !e
en,oy by creating a superior product and giving back to our communities.

T$5N0& 0$&O >58%N-T3 "># &td. is an $38 M776::777 and an $38 :777:
:775 certified company. The dairy is follo!ing @uality 0anagement 3ystem and
Food 3afety 3tandards.
part from $38 certification, $t has -ertificate from 3?3 on 30> nalysis too.
T$5N0& 0$&O >58%N-T3 "># &td. has $3$ &icence, gmark &icence and
adheres to all other statutory standards as per requirements.
0)oucts:-
58
T$5N0& 0$&O >58%N-T3 "># &td. covers the entire spectrum of dairy
products sold in markets. The complete ranges of T$5N0& 0$&O >58%N-T3 "># &td.
are highly nutritious, healthy and bring you a !orld of goodness.
T$5N0& 0$&O >58%N-T3 "># &td. pasteuri+es and packages all fresh
dairy products in technologically superior and hygienic conditions to ensure pure natural
freshness.
T$5N0& 0$&O >58%N-T3 "># &td. .andles D.5 &akhs liters of milk per
day in all their packing 3tations and main dairy plant !hich is the highest in the state of
ndhra >radesh.
Ti)umala Mil6 0)oucts 203 "t. *anles Mil6 in t-e Follo.ing "ocations
Ta1le 3.2
0acing "ocations *anling Ca'acit$ 'e) a$
?udur
9.7 &akh litres
Pellala -heruvu
:.7 &akh litres
)himadolu
6.7 &akh litres
>alamaner
:.7 &akh litres
?ungal
9.7 &akh litres
0)ocu)ement of Mil6:-
58
T$5N0& 0$&O >58%N-T3 "># &td. established :5 -hilling centers in
ndhra >radesh and 8 chilling centers in Tamilnadu to procure both -o! F )uffalo milk.
)est quality milk is procured and chilled at chilling centers, to retain freshness of milk. The
strength of the T$5N0& 0$&O >58%N-T3 "># &td. is to procure more than D.7 lakh
liters of milk directly from agentsGfarmers using state'of'the'art machinery and professionally
trained staff.
0)ouction:-
T$5N0& 0$&O >58%N-T3 "># &td. has its main dairy plant at Oadivedu !ith
handling capacity of 9.7 lakhs lts of milk per day from various chilling centers and
local units.
0ain plant processes C.7 &akhs &ts of milk per day in automatic sachet filling
machines for supply and distribution to -hennai, Tirupati, 4ellore, etcR in insulated
puffs.
There is continuous gro!th in sale of milk from 57777 ltrs to C57777 ltr !ith in a
span of one'decade.
T$5N0& 0$&O >58%N-T3 "># &td. has its o!n supply chain management,
!hich is the key to timely distribution.
t >alamaner unit processes and supplies 6.77 lakh liters of milk and :7777 liters of
curd to )angalore city.
Pellalacheruvu F )himadolu packing stations processes and supplies :.7 lakh liters
of milk to Pi,aya!ada., ?untur , Aluru, Pisakhapatnam, Oakinada and 5a,ahmundry.
=adiyaram plant has capacity of 57777 &iters milk to cater to the markets of 0edak,
4i+ambad, dilabad and Oarim 4agar %istricts of .>
58
/utte): '
$s made from pure co! F )uffalo fat under hygienically processed through
continuous butter making machine.
9-ee :'
$s made from pure co! F )uffalo butter under supervision C7 years
granulation, colour and aroma of ghee !ith a capacity of 8 tonnes per day. ?hee is packed in
a !ide range of E ml to 65 Ogs.
Mil6 0o.e) :'
$s made from fresh co! F buffalo milk, plant is capable of marketing all type
of milk po!ders !ith a capacity of 65 tonnes per day.
/$-0)oucts :'
Flavored 0ilk,
&assi, Ohava,
0ilk -ake,
0ysore pak,
>anner,
58
$ce -ream,
-urd,
)uttermilk.
/alance %-eet:-
)alance sheet is the most significant financial statement. $t
indicates the financial condition or the state of affairs of a business at a
particular moment of time. 0ore specifically, /balance sheet contains
information about resources and obligations of a business entity and about its
o!ners( interests( in the business at a particular pint of time. Thus, the balance
sheet of a firm prepared on 0arch C6, :76C reveals the firm(s financial position
on this specific date. $n the language of accounting, balance sheet
communicates information about assets, liabilities and o!ner(s equity for a
business firm as on a specific date. $t provides a snapshot of the financial
position of the firm at the close of the firm(s accounting period.
58
%c-.no &s on 31-D3-2DDE
$.%OURC7 OF FUND%:-
6# 3hare holders fund
:#5eserves and surplus
C#3ecured loans
9#Nn'secured loans
$$. &00"IC&TION OF FUND%:-
13Fi8e assets:-
?ross block
&ess: deprecation

-apital !ork'in'progress
23Investments
33Cu))ent &ssets:-
$nventory
3undry debtors
%eposits
-ash and bank balances
&oans, advances and prepaid e*penses
6
:
C
9
5
D
E
8
M
67
:C757777.77
985EM68M.77
68CC:DD68.77
7.77
:59M5587E.77
6989DEDD7.77
D78CM978.77
8ED:8:5:.77
9CE568CC.77
6C6C87785.77
:D67777.77
67M7E569E.77
DC5866C.77
9C:6D57.77
:DCDE9CC.77
:5CDE99M.77
6E698MEM:.77
58

"ess: cu))ent lia1ilities an ')ovisions:
-urrent liabilities
>rovisions for e*penses

N7T CURR7NT &%%7T%
9# 0isc.A*pencess to the e*tent not !ritten off
66
6:
9C9M:::6.77
E78E69M.77
575EMCE7.77
6:7M679::.77
55C77.77
:59M5587E.77
/alance s-eet of Ti)umala Mil6 0)oucts 0)ivate "imite &s on
31-D3-2DDE
Ta1le !.1
%c-.no &s on 31-D3-2DDF
$.%OURC7 OF FUND%:-
6# 3hare holders fund
:#5eserves and surplus
C#3ecured loans
9#Nn'secured loans
$$. &00"IC&TION OF FUND%:-
13Fi8e assets:-
?ross block
&ess: deprecation

-apital !ork'in'progress
6
:
C
9
:C757777.77
D95658CM.M5
679:5D978.7D
8759CM99.77
:E:CDD6M:.76
:9C955589.8C
M75M88:8.6D
65:85DE5D.DE
M95C6CE.C7
6D:C7M8MC.ME
58
23Investments
33Cu))ent &ssets:-
$nventory
3undry debtors
%eposits
-ash and bank balances
&oans, advances and prepaid e*penses

"ess: cu))ent lia1ilities an ')ovisions:
-urrent liabilities
>rovisions for e*penses

N7T CURR7NT &%%7T%
9# 0isc.A*pencess to the e*tent not !ritten off
5
D
E
8
M
67
66
6:
:D67777.77
677ED785D.77
D8999C:.7:
EC9ED9C.77
C88C8976.MD
:::8965E.E8
6ED7E59M7.ED
D7:MM:89.ED
8C9MM7E.MD
D8D9M6M:.E:
67E9:D:M8.79
:7777.77
:E:CDD6M:.76
/alance s-eet of Ti)umala Mil6 0)oucts 0)ivate "imite &s on
31-D3-2DDF
Ta1le !.2
/alance s-eet of Ti)umala Mil6 0)oucts 0)ivate "imite &s on
31-D3-2D1D
%c-.no &s on 31-D3-2D1D
$.%OURC7 OF FUND%:-
6# 3hare holders fund
:#5eserves and surplus
C#3ecured loans
$$. &00"IC&TION OF FUND%:-
13Fi8e assets:-
?ross block
&ess: deprecation
6
:
C
8:7C:C8:
6:66:E:89
C8C59E5M5
58DE7E:D6
997D:E::D
6E9M65:8M
58

-apital !ork'in'progress
23Investments
%iffered ta* asset
33Cu))ent &ssets:-
$nventory
3undry debtors
%eposits
-ash and bank balances
&oans, advances and prepaid e*penses

"ess: cu))ent lia1ilities an ')ovisions:
-urrent liabilities
>rovisions for e*penses

N7T CURR7NT &%%7T% 2&3-2/3
9# 0isc.A*pencess to the e*tent not !ritten off
9

5
D
E
8
M
"#
67
66
")#
:D5E66MC8
M977:58
:E566:6M5
CCC75:7
7
:58MC5876
:CDDD5MM
DMM7:78
699:EC77C
9878DDM5
986M5:C7D
65C8CE879
6M8ME9:E
6ECEC5:C6
C78:6E7E5
9E9E6
58DE7E:D6
Ta1le !.3
/alance %-eet of Ti)umala Mil6 0)oucts 0)ivate "imite as on
31-D3-2D11
%c-.no &s on 31-D3-2D11
$.%OURC7 OF FUND%:-
6# 3hare holders fund
:#5eserves and surplus
C#3ecured loans
6
:
8:7:687M
::76:589M
CCD89E8C9
DC8MM59M:
58
$$. &00"IC&TION OF FUND%:-
13Fi8e assets:-
?ross block
&ess: deprecation

-apital !ork'in'progress
23Investments
%iffered ta* asset
33Cu))ent &ssets:-
$nventory
3undry debtors
%eposits
-ash and bank balances
&oans, advances and prepaid e*penses

"ess: cu))ent lia1ilities an ')ovisions:
-urrent liabilities
>rovisions for e*penses

N7T CURR7NT &%%7T% 2&3-2/3
9# 0isc.A*pencess to the e*tent not !ritten off
C
9

5
D
E
8
M
"#
67
66
")#
559:8CM67
::E5M75E6
C:DDMCCCM
6569E7E6
C96897967
CCC75:7
C9CCC
:E69:8EMM
6866C7E7
EE8EC7M
6:M5DM597
E:CCC:5E
9MM:C6ME5
68E76M585
6899:5C8
:759D:6:C
:MCEDM85C
:7CED
DC8MM59M:
Ta1le !.!
/alance s-eet of Ti)umala Mil6 0)oucts 0)ivate "imite &s on
31-D3-2D12
%c-.no &s on 31-D3-2D12
58
$.%OURC7 OF FUND%:-
6# 3hare holders fund
:#5eserves and surplus
C#3ecured loans
$$. &00"IC&TION OF FUND%:-
13Fi8e assets:-
?ross block
&ess: deprecation

-apital !ork'in'progress
23Investments
%iffered ta* asset
33Cu))ent &ssets:-
$nventory
3undry debtors
%eposits
-ash and bank balances
&oans, advances and prepaid e*penses

"ess: cu))ent lia1ilities an ')ovisions:
-urrent liabilities
>rovisions for e*penses

N7T CURR7NT &%%7T% 2&3-2/3
9# 0isc.A*pencess to the e*tent not !ritten off
6
:
C
9

5
D
E
8
M
"#
67
66
")#
8:7:687M
C5:85:965
9987C:758
88:M7D:8:
ECMM:9DME
C77M7D896
9CM76E85D
D:6D67DM
5766E8M:5
CEC75:7
67E5EM
C7M6M:69C
6D57965E
MM:E87D
6DD99EC88
M5:99C79
5MEC65EMM
6M9676D75
:5C96:CE
:6M99:89:
CEE8E:M5E
6DC76
88:M7D:8:
Ta1le !.G
/alance s-eet of Ti)umala Mil6 0)oucts 0)ivate "imite &s on
31-D3-2D13
Ta1le !.H
58
%c-.no &s on 31-D3-2D13
$.%OURC7 OF FUND%:-
6# 3hare holders fund
:#5eserves and surplus
C#3ecured loans
$$. &00"IC&TION OF FUND%:-
13Fi8e assets:-
?ross block
&ess: deprecation

-apital !ork'in'progress
23Investments
%iffered ta* asset
33Cu))ent &ssets:-
$nventory
3undry debtors
%eposits
-ash and bank balances
&oans, advances and prepaid e*penses

"ess: cu))ent lia1ilities an ')ovisions:
-urrent liabilities
>rovisions for e*penses

N7T CURR7NT &%%7T% 2&3-2/3
9# 0isc.A*pencess to the e*tent not !ritten off
6
:
C
9

5
D
E
8
M
"#
67
66
")#
::65M787M
CEE9DME7:
66:58558:D
6E:9M6DCCE
675697:C6:
978599C57
D9:85EMD:
69MM::D9C
EM:E87D75
CEC75:7
67E5EM
DC756DC96
6M9EE65:
66:97E5E
:CD78M:DC
C:56D5M7C
6:::98M96D
:5M86::79
C9CM687D
:M9:79767
M:8:8597D
6:::D
6E:9M6DCCE
0)ofit an "oss &ccount:-

)alance sheet is considered as a very significant statement by bankers and
other lenders because it indicates the firm(s financial solvency and liquidity, as measured by
58
its resources and obligations. .o!ever, creditors, particularly bankers and financial analysts
in $ndia have recently started paying more attention to the firm(s earning capacity as a
measure of its financial strength. The earning capacity and potential of a firm are reflected by
its profit and loss account. The profit and loss account is a /score'board( of the firm(s
performance during a period of time.
>rofit and loss account presents the summary of revenues, e*penses and net
income "or# net loss of a firm. $t serves as a measure of the firm(s profitability. 5evenues are
amount that the customers pay to the firm for providing them goods and services. The firm
uses economic resources in providing goods and services to customers. The cost of the
economic resources used to earn revenues during a period of time is called e*penses. Thus
determine, net profit, the accounting system matches e*penses incurred during the
accounting period against revenues earned during that period. This matching of e*penses
!ith revenue is called matching concept.
5evenues and e*penses are sometimes categori+ed as operating and non'
operating. 5evenues "e*penses# arising from the main operations or business of the firm are
called operating revenues "operating e*penses#.
0)ofit an loss account of Ti)umala Mil6 0)oucts 0)ivate "imite fo) t-e
$ea) ene on 31.D3.2DDE
Ta1le !.I
58
%c-.no Fo) t-e $ea) ene
31.D3.2DDE
I.INCOM7:-
3ales
-onversion charges received
8ther income
$ncrease G "decrease # in stock
II. 7<07NDITUR7:-
5a! materials F packing material consumed
>rocessing and operating e*penses
3alaries, !ages and other payments to staff
dministrative and marketing e*penses
$nterest and financial charges
%epreciation

III. ')ofit 1efo)e ta8:-
dd: earlier year income "net off e*penditure#

&ess: >rovision for ta*
>rofit after ta*
&ess: Aarlier year income ta*
Fringe benefit ta* paid
dd: )alance brought for!ard

)alance available for appropriation
/&"&NC7 C&RRI7D FOR:&RD TO
/&"&NC7 %*77T
6C
69
65
6D
6E
68
6M
:7
6:97977E86.77
7.77
CM59EEM.77
"579M9E.77#
6:9C857D6C.77
67:C57D5E6.77
MC8C6M:E.77
6CE8C55D.77
DD76C6CE.77
67:9:CD:.77
6ME76CEE.77
6::E7E8MC7.77
6DEE6D8C.77
69:D87.77
6DM69CDC.77
"9C96777.77#
6:5ECCDC.77
"67777D.77#
7.77
6:9ECC5E.77
CD6758C:.77
985EM68M.77
985EM68M.77
0)ofit an loss account of Ti)umala Mil6 0)oucts 0)ivate "imite fo) t-e
$ea) ene on 31.D3.2DDF
Ta1le !.E
58
%c-.no Fo) t-e $ea) ene
31.D3.2DDF
I.INCOM7:-
3ales
-onversion charges received
8ther income
$ncrease G "decrease # in stock
II. 7<07NDITUR7:-
5a! materials F packing material consumed
>rocessing and operating e*penses
3alaries, !ages and other payments to staff
dministrative and marketing e*penses
$nterest and financial charges
%epreciation

III. ')ofit 1efo)e ta8:-
dd: earlier year income "net off e*penditure#

&ess: >rovision for ta*
>rofit after ta*
&ess: Aarlier year income ta*
Fringe benefit ta* paid
dd: )alance brought for!ard

)alance available for appropriation
/&"&NC7 C&RRI7D FOR:&RD TO
/&"&NC7 %*77T
6C
69
65
6D
6E
68
6M
:7
698C9D8:7E.6M
6EE8676.77
5CE78:M.96
"C6856D7D.77#
6958ED55C6.D7
66E9E6E6:8.7C
66M958C99.9M
6D86C9MC.87
8CC8MDD7.CC
6:8589D7.::
:ME5M9:7.77
69CDMMD57D.8E
:6EDM7:9.EC
7.77
:6EDM7:9.EC
"57887E9.77#
6DD87M57.EC
"97M8CC.77#
"CC99DE.77#
65MCDD57.EC
985EM68M.::
D95658CM.M5
D95658CM.M5
0)ofit &n "oss &ccount of Ti)umala Mil6 0)oucts 0)ivate "imite fo)
t-e ;ea) 7ne on 31.D3.2D1D
Ta1le !.F
58
%c-.no Fo) t-e $ea) ene
31.D3.2D1D
I.INCOM7:-
3ales
8ther income
$ncrease G "decrease # in stock
II. 7<07NDITUR7:-
5a! materials F packing material consumed
>rocessing and operating e*penses
3alaries, !ages and other payments to staff
dministrative and marketing e*penses
$nterest and financial charges
%epreciation

III. ')ofit 1efo)e ta8:-
&ess: >rovision for ta*
Fringe benefit ta* paid
0)ofit afte) ta8:-
dd:' differed ta*
>revious year items
&ess: income ta* of previous year
dd:' )alance brought for!ard
/&"&NC7 C&RRI7D FOR:&RD TO
/&"&NC7 %*77T
6:
6C
69
65
6D
6E
68
6M
:85:EC9C67
8:EMMD5
6:DD9MCC
:8ECDEM:78
:CC8:D6D6M
:6C9787MD
:M9E7D:D
6DEE5MEM9
:C5MMD59
97CDM7DC
:86:8D885:
D7867C5D
6CEM9M88
59EM78
9D9DE9D7
7
7
67::76M
95995996
E5D8689C
6:66:E:89
0)ofit &n "oss &ccount of Ti)umala Mil6 0)oucts 0)ivate "imite fo)
t-e ;ea) 7ne on 31.D3.2D11
Ta1le !.1D
58
%c-.no Fo) t-e $ea) ene
31.D3.2D11
I.INCOM7:-
3ales
8ther income
$ncrease G "decrease # in stock
II. 7<07NDITUR7:-
5a! materials F packing material consumed
>rocessing and operating e*penses
3alaries, !ages and other payments to staff
dministrative and marketing e*penses
$nterest and financial charges
%epreciation

III. ')ofit 1efo)e ta8:-
&ess: >rovision for ta*
Fringe benefit ta* paid
0)ofit afte) ta8:-
dd:' differed ta*
>revious year items
&ess: income ta* of previous year
dd:' )alance brought for!ard
/&"&NC7 C&RRI7D FOR:&RD TO
/&"&NC7 %*77T
6:
6C
69
65
6D
6E
68
6M
CEC87:CE5M
:776C95M
:96M:DD8
CE8:::M88D
C77C5::CD5
:MM98EC5D
9C5968D7
:6C9M7:88
CE666:8D
5:DE5:8:
CD5M8:89CD
6C:97699M
C:M8EDE7D
D:E866
M8E8DMC:
C9CCC
6E8856
655:
M8MM85D9
6:66:E:89
::76:589M
0)ofit &n "oss &ccount of Ti)umala Mil6 0)oucts 0)ivate "imite fo)
t-e ;ea) 7ne on 31.D3.2D12
Ta1le !.11
58
%c-.no Fo) t-e $ea) ene
31.D3.2D12
I.INCOM7:-
3ales
8ther income
$ncrease G "decrease # in stock
II. 7<07NDITUR7:-
5a! materials F packing material consumed
>rocessing and operating e*penses
3alaries, !ages and other payments to staff
dministrative and marketing e*penses
$nterest and financial charges
%epreciation

III. ')ofit 1efo)e ta8:-
&ess: >rovision for ta*
Fringe benefit ta* paid
0)ofit afte) ta8:-
dd:' differed ta*
&ess: income ta* of previous year
dd:' )alance brought for!ard
mount transfer for allotment of bonus shares
/&"&NC7 C&RRI7D FOR:&RD TO
/&"&NC7 %*77T
6:
6C
69
65
6D
6E
68
6M
9E7EM9EECM
:66D76CC
':88E978M
9E77:CCE89
CE7976E5DM
CDD5:6CCC
DD57C9CD
:D995DE5D
C6886MDC
E5C87:99
9578ED6C77
6M69E:98C
5D78C5ME
D56MC5
6C9ECDM56
EC:9D
:78CDC6
6C:E:D5DD
::76:589M
C5:85:965
7
C5:85:965
0)ofit &n "oss &ccount of Ti)umala Mil6 0)oucts 0)ivate "imite fo)
t-e ;ea) 7ne on 31.D3.2D13
Ta1le !.12
58
%c-.no Fo) t-e $ea) ene
31.D3.2D13
I.INCOM7:-
3ales
8ther income
$ncrease G "decrease # in stock
II. 7<07NDITUR7:-
5a! materials F packing material consumed
>rocessing and operating e*penses
3alaries, !ages and other payments to staff
dministrative and marketing e*penses
$nterest and financial charges
%epreciation

III. ')ofit 1efo)e ta8:-
&ess: >rovision for ta*
Fringe benefit ta* paid
0)ofit afte) ta8:-
dd:' differed ta*
&ess: income ta* of previous year
dd:' )alance brought for!ard
mount transfer for allotment of bonus shares
/&"&NC7 C&RRI7D FOR:&RD TO
/&"&NC7 %*77T
6:
6C
69
65
6D
6E
68
6M
585M7MD8C9
6EC98D:8
6MD8DC7DD
D7ECC785:M
9E5:E:C9C8
95M876956
67D9E5DMM
C96ME696M
5CE7MC5C
67EDCE566
58::C688E6
:57M8MD58
8DEMMC:7
7
6D96M7CC8
7
9756
69D68D:8E
C5:85:965
56E7C8E7:
6CM5DM777
CEE9DME7:
Funs Flo. &nal$sis
58
3ignificant technique of financial analysis is /Funds Flo! nalysis(. $t
is designed to highlight changes in the financial conditions of a business concern bet!een
t!o points of time !hich generally conform to beginning and ending financial statement
dates. Funds flo! statement is also termed as a statement of sources and applications of
Funds(, /statement of changes in !orking capital, /statement of changes in Financial
>osition(, /statement of Funds supplied and pplied(, /statement of Funds ?enerated and
A*pended(, /!here got and !here gone statement(, fuds statement.
lthough financial statements supply useful information to the
management and describe the nature of changes o!nership as a result of the period(s
productive and commercial activities, these statements fail to mirror the funds changes that
have taken place over a given time span. They do not spell out the movements of funds. $t is
more important to describe the sources from !hich additional funds sere derived and the uses
to !hich these funds !ere put, because the ultimate success of a business enterprise depends
on !here got and !here gone situations. The funds flo! statement is, therefore, prepared to
uncover the information !hich the financial statements fail to describe clearly.
Meaning an Conce't of 4Flo. of Funs5:-
The term /flo!( means movement and includes both /inflo!( and
/outflo!(. The term Flo! of funds( means transfer of economic valued from one asset of
equity to another. Flo! of funds is said to have taken placed !hen any transaction makes
changes in the amount of funds available before happening of the transaction. $f the effect of
transaction results in the increase of funds, it is called sources of funds and if it results in the
decrease of funds, it if kno!n as application of funds, further, in case the transaction does not
change funds it is said to have not resulted in the flo! of funds. ccording to the !orking
capital concept of funds, the term /flo! of funds( refers to the movement of funds in the
!orking capital. $f any transaction results in the increase in !orking capital, it is said lo be a
source or inflo! of funds and if it results in the decrease if !orking capital, it is said to be an
application or out'flo! of funds.
58
Funs Flo. %tatement:-
The follo!ing are the definitions of funds flo! statement.
&cco)ing to R.N. &nt-on$:-
BThe funds flo! statement describes the sources from !hich additional
funds !ere derived and the uses to !hich these funds !ere put1.
&cco)ing to R.&. Foul6:-
2 statement of sources and applications of funds is a technical devise
designed to analysis the changes in the financial conditions of a business bet!een t!o dates1.
&cco)ing to /ig man:-
2$t is a statement !hich highlights the underlying financial movements
and e*plains the changes of !orking capital from one point of time to another1.
Thus funds flo! statement is a report !hich summari+es the events
taking place bet!een the t!o accounting periods. $t spells out the sources from !hich funds
!ere derived and the uses to !hich these funds !ere put. This statement is essentially
derived from an analysis of the changes that have occurred in assets and liabilities items
bet!een t!o balances sheet dates. $n this statements only the net changes are sho!s that the
outcome of a transaction as of a series of transactions upon the financial condition of a
business enterprise is reflected more sharply.
Rules fo) Funs Flo. &nal$sis:-
58
The flo! of funds occurs !hen a transaction changes on the one hand a non current
account and on the other current account and vice'versa.
=hen a change in a non current account e.g., fi*ed assets, long term liabilities
reserves and surplus fictitious assets etc, is follo!ed by a change in another non'
current account, it does not amount to flo! of funds.

This is because of the fact that in such cases neither the !orking capital increases nor
decreases. 3imilarly, !hen a change in one current account results in a change in
anther current account it does not affect funds. Funds move from non current to
current transactions or vice'versa only.
$n simple language funds move !hen a transaction affects "i# a current assets and a
fi*ed assets or "ii# a fi*ed and a current liability or "iii# a current asset and a fi*ed
liability of "iv# a fi*ed liability and current liability, and funds so not move !hen the
transaction affects fi*ed assets and fi*ed liability or current assets and current
liability.
%c-eule of C-anges in :o)6ing Ca'ital fo) t-e ;ea) 2DDE-DF
58
Ta1le !.13
0a)ticula)s
0)evious
$ea) 2DDI-DE
Cu))ent $ea)
2DDE-DF
:o)6ing Ca'ital
Inc)ease Dec)ease
&3 Cu))ent assets:

6# $nventories
67M7E569E 677ED785D
8C69:M6
:# 3undry %ebtors DC5866C D8999C:.7: 98DC6M.7:
C# -ash F )ank balance :DCDE9CC C88C8976.MD 6:9E7MD8.MD
9# %eposits 9C:6D57 EC9ED9C C7:5MMC
5# &oans, dvances and
prepaid e*penditures
:5CDE99M :::8965E.E8 C78C:M6.::
Total Cu))ent &ssets 1I1!EFIF2 1IHDIG!FD.ED
/3 Cu))ent "ia1ilities:
6# -urrent &iabilities 9C9M:::6 D7:MM:89.ED 6D87E7DC.ED
:# >rovisions for
e*penses
E78E69M 8C9MM7E.MD 6:D:E58.MD
Total Cu))ent
"ia1ilities
GDGIF3ID HEH!F1F2.I2
4et !orking capital "')# 6:7M679:: 67E9:D:M8.67
%ecrease in !orking
capital
6C9896:C.M7
Total 12DF1D!22 12DF1D!22
&?uste 0)ofit C "oss &ccount fo) t-e ;ea) 2DDE-DF
58
Ta1le !.1!
D) C)
0a)ticula)s &mount 0a)ticula)s &mount
To %epreciation Gc M75M88:8.6D
)y 8pening )alance of
5eserves and
surplus Gc 985EM68M
To -losing )alance of
5eserves and surplus
Gc D95658CM.M5
)y Funds from
operations
67D5C59EM.66
1GG11!HH.11 1GG11!HH.11
Funs Flo. %tatement fo) t-e ;ea) 2DDE-DF
Ta1le !.1G
58
%ou)ces &mount &''lications &mount
5aising unsecured
loans
8759CM99 >ayment on secured loan EM7E7:7M.M9
Funds from
operations
67D5C59EM.66
%ecreased in !orking in
progress
:78856E6.87
%ecreased in
deferred ta* assets
8ED:797:E.CC >urchase fi*ed assets MED89E9M:.D7
A*penditure !ritten
off

C5C77.77
%ecreased in
!orking capital

6C9896:C.M7
1DIHED2EI!.3! 1DIHED2EI!.3!
Inte)')etation:-
58
$t is observed from table 9.6C that the decrease in !orking capital 6C9896:C.M7G' in
the year :778'7M.
The current assets of the company are increased comparing !ith previous year
results.
The current liabilities of the company are increased comparing the previous results.
To find the table 9.69 the company gains funds from the operation to an e*tent
67D5C59EM.66G'
To find the table 9.69 the company deprecation is M75M88:8.6DG'.
To find out the table 9.69 the company closing balanced of reserves and surplus is
D95658CM.M5G'
To find the table 9.65 the company decreased in !orking capital 6C9896:C.M7G'
%c-eule of C-anges in :o)6ing Ca'ital fo) t-e ;ea) 2DDF-1D
58
Ta1le !.1H
0a)ticula)s
0)evious
$ea) 2DDE-DF
Cu))ent $ea)
2DDF-1D
:o)6ing Ca'ital
Inc)ease Dec)ease
&3 Cu))ent assets:

6# $nventories
677ED785D.77 :58MC5876.77
6586E9M95.77
:# 3undry %ebtors D8999C:.7: :CDDD5MM.77 6D8::6DD.M8
C# -ash F )ank balance C88C8976.MD 699:EC77C.77 6759C9D76.77
9# %eposits EC9ED9C.77 DMM7:78.77 C5E9C5.77
5# &oans, dvances and
prepaid e*penditures :::8965E.E8
9878DDM5.77 :587:5CE.::
Total Cu))ent &ssets 1IHDIG!FD.ED !E1FG23DH.DD
/3 Cu))ent "ia1ilities:
6# -urrent &iabilities D7:MM:89.ED 65C8CE879.77
:# >rovisions for
e*penses
8C9MM7E.MD 6M8ME9:E.77
Total Cu))ent
"ia1ilities
HEH!F1F2.I2 1I3I3G231.DD
4et !orking capital "')# 67E9:D:M8.67 C78:6E7E5.77 999D6987.ED
%ecrease in !orking
capital
:77EM7EED.M7 6659E56M.79
Total 1DI!2H2FE.1D 1DI!2H2FE.1D
&?uste 0)ofit C "oss &ccount fo) t-e ;ea) 2DDF-1D
Ta1le !.1I
58
D) C)
0a)ticula)s &mount 0a)ticula)s &mount
To %epreciation Gc 6E9M65:8M.77
)y 8pening )alance of
5eserves and
surplus Gc
D95658CM.M5
To -losing )alance of
5eserves and surplus
Gc
6:66:E:89.77
)y Funds from
operations
:C65:DECC.67
2FHD!2GI3.DD 2FHD!2GI3.DD
Funs Flo. %tatement fo) t-e ;ea) 2DDF-1D
Ta1le !.1E
58
%ou)ces &mount &''lications &mount
5aising secured
loans
Funds from
operations
:EM:M668E.77
:C65:DECC.67
>ayment on un
secured loan
8759CM99.77
5aising 3hare
holders fund
58M8:C8:.77
>urchase fi*ed assets 6ME6E6D96.:7
%ecreasing in
!orking capital
:77EM7EED.M7
%ecreased in
investments
57D67E755E.:7
$ncreasing in
misalliances
e*penses !ritten
of
95D86M57DC.97
G33EIEH1!2.!D G33EIEH1!2.!D
Inte)')etation:-
58
$t is observed from table 9.6D that the decrease in !orking capital :77EM7EED.M7G' in
the year :77M'67.
The current assets of the company are increased comparing !ith previous year
results.
The current liabilities of the company are increased comparing the previous results.
To find the table 9.6E the company gains funds from the operation to an e*tent
:C65:DECC.67G'
To find the table 9.6E the company deprecation is 6E9M65:8M.77G'.
To find out the table 9.6E the company closing balanced of reserves and surplus is
6:66:E:89.77G'
To find the table 9.68 the company decreased in !orking capital :77EM7EED.M7G'
58
%c-eule of C-anges in :o)6ing Ca'ital fo) t-e ;ea) 2D1D-11
Ta1le !.1F
0a)ticula)s
0)evious
$ea) 2DDF-1D
Cu))ent $ea)
2D1D-11
:o)6ing Ca'ital
Inc)ease Dec)ease
&3 Cu))ent assets:

6# $nventories
:58MC5876.77 :E69:8EMM.77
6:9M:MM8.77
:# 3undry %ebtors :CDDD5MM.77 6866C7E7.77 555C5:M.77
C# -ash F )ank balance 699:EC77C 6:M5DM597.77 E7887676.77
9# %eposits DMM7:78.77 EE8EC7M.77 69E7C9DC.77
5# &oans, dvances and
prepaid e*penditures
9878DDM5.77 E:CCC:5E.77 :9:9D5D:.77
Total Cu))ent &ssets !E1FG23DH.DD !FF231FIG.DD
/3 Cu))ent "ia1ilities:
6# -urrent &iabilities 65C8CE879.77 68E76M585.77 CC686E86.77
:# >rovisions for
e*penses
6M8ME9:E.77 6899:5C8.77 695988M.77
Total Cu))ent
"ia1ilities
1I3I3G231.DD 2DG!H2123.DD
4et !orking capital "')# C78:6E7E5.77 E79DM97M8.77
$ncrease in !orking
capital
CMD9EE7:C.77
Total ID!HF!DFE.DD ID!HF!DFE.DD
58
&?uste 0)ofit C "oss &ccount fo) t-e ;ea) 2D1D-11
Ta1le !.2D
D) C)
0a)ticula)s &mount 0a)ticula)s &mount
To %epreciation Gc ::E5M75E6.77
)y 8pening )alance of
5eserves and
surplus Gc
6:66:E:89.77
To -losing )alance of
5eserves and surplus
Gc
::76:589M.77
)y Funds from
operations
C:D58M6CD.77
!!II1H!2D.DD !!II1H!2D.DD
Funs Flo. %tatement fo) t-e ;ea) 2D1D-11
58
Ta1le !.21
%ou)ces &mount &''lications &mount
Funds from
operations C:D58M6CD.77
>ayment on secured
loan
9DDMMED6.77
5aising 3hare
holders fund 675EC.77 %eferred ta* assets C9CCC.77
$ncreasing !orking
in progress
5E9D86C.77 >urchase fi*ed assets 66CD5DD89.77
$ncreasing in
investments
::95:6:EM.77
$ncrease in !orking
capital
CMD9EE7:C.77
GGHEHIED1.DD GGHEHIED1.DD
Inte)')etation:-
58
$t is observed from table 9.6M that the increase in !orking capital CMD9EE7:C.77G' in
the year :767'66.
The current assets of the company are increased comparing !ith previous year
results.
The current liabilities of the company are increased comparing the previous results.
To find the table 9.:7 the company gains funds from the operation to an e*tent
C:D58M6CD.77G'
To find the table 9.:7 the company deprecation is ::E5M75E6.77G'.
To find out the table 9.:7 the company closing balanced of reserves and surplus is
::76:589M.77G'
To find the table 9.:6 the company increasing in !orking capital CMD9EE7:C.77G'
58
%c-eule of C-anges in :o)6ing Ca'ital fo) t-e ;ea) 2D11-12
Ta1le !.22
0a)ticula)s
0)evious
$ea) 2D1D-11
Cu))ent $ea)
2D11-12
:o)6ing Ca'ital
Inc)ease Dec)ease
&3 Cu))ent assets:


6# $nventories
:E69:8EMM.77 C7M6M:69C.77
CEEDCC99.77
:# 3undry %ebtors 6866C7E7.77 6D57965E.77 6D78M6C.77
C# -ash F )ank balance 6:M5DM597.77 6DD99EC88.77 CD8EE898.77
9# %eposits EE8EC7M.77 MM:E87D.77 :6979ME.77
5# &oans, dvances and
prepaid e*penditures
E:CCC:5E.77 M5:99C79.77 ::M6679E.77
Total Cu))ent &ssets !FF231FIG.DD GFI31GIFE.DD
/3 Cu))ent "ia1ilities:
6# -urrent &iabilities 68E76M585.77 6M9676D75.77 E78:7:7.77
:# >rovisions for
e*penses
6899:5C8.77 :5C96:CE.77 D8M8DMM.77
Total Cu))ent
"ia1ilities
2DG!H2123.DD 21F!!2E!2.DD
4et !orking capital "')# :MCEDM85:.77 CEE8E:M5D.77
$ncrease in !orking
capital
8967C679.77
Total 3IIEI2FGH.DD 3IIEI2FGH.DD
58
&?uste 0)ofit C "oss &ccount fo) t-e ;ea) 2D11-12
Ta1le !.23
D) C)
0a)ticula)s &mount 0a)ticula)s &mount
To %epreciation Gc C77M7D896.77
)y 8pening )alance of
5eserves and
surplus Gc
::76:589M.77
To -losing )alance of
5eserves and surplus
Gc
C5:85:965.77
)y Funds from
operations
9CCDCC97E.77
HG3IGF2GH.DD HG3IGF2GH.DD
58
Funs Flo. %tatement fo) t-e ;ea) 2D11-12
Ta1le !.2!
%ou)ces &mount &''lications &mount
5aising secured
loans
Funds from
operations
666689::9.77
9CCDCC97E.77
%iffered ta* assets
increased
>ayment of unsecured
loans
EC:9D.77
:78C5E878
$ncreasing !orking
in progress
9E76CMM8.77 >urchase fi*ed assets :MM:ME9E6.77
$ncreasing in !orking
capital
8967C679.77
GF1E31H2F.DD GF1E31H2F.DD
58
Inte)')etation:-
$t is observed from table 9.:: that the increase in !orking capital 8967C679.77G' in
the year :766'6:.
The current assets of the company are increased comparing !ith previous year
results.
The current liabilities of the company are increased comparing the previous results.
To find the table 9.:C the company gains funds from the operation to an e*tent
9CCDCC97E.77G'
To find the table 9.:C the company deprecation is C77M7D896.77G'.
To find out the table 9.:C the company closing balanced of reserves and surplus is
C5:85:965.77G'
To find the table 9.:9 the company increasing in !orking capital 8967C679.77G'
58
%c-eule of C-anges in :o)6ing Ca'ital fo) t-e ;ea) 2D12-13
Ta1le !.2G
0a)ticula)s
0)evious
$ea) 2D11-12
Cu))ent $ea)
2D12-13
:o)6ing Ca'ital
Inc)ease Dec)ease
&3 Cu))ent assets:

6# $nventories
C7M6M:69C.77 DC756DC96.77
C:6C:96M8
:# 3undry %ebtors 6D57965E.77 6M9EE65:.77 :ME:MM5.77
C# -ash F )ank balance 6DD99EC88.77 :CD78M:DC.77 DMD968E5.77
9# %eposits MM:E87D.77 66:97E5E.77 6C6:M56.77
5# &oans, dvances and
prepaid e*penditures
M5:99C79.77 C:56D5M7C.77 ::MM:65MM.77
Total Cu))ent &ssets GFI31GIFE.DD 1222!EF!1H.DD
/3 Cu))ent "ia1ilities:
6# -urrent &iabilities 6M9676D75.77 :5M86::79.77 D5E675MM.77
:# >rovisions for
e*penses
:5C96:CE.77 C9CM687D.77 M7575DM.77
Total Cu))ent
"ia1ilities
21F!!2E!2.DD 2F!2D!D1D.DD
4et !orking capital "')# CEE8E:M5D.77 M:8:8597D.77
$ncrease in !orking
capital
55796:957.77
Total M:8:8597D.77 M:8:8597D.77
58
&?uste 0)ofit C "oss &ccount fo) t-e ;ea) 2D12-13
Ta1le !.2H
D) C)
0a)ticula)s &mount 0a)ticula)s &mount
To %epreciation Gc 675697:C6:.77
)y 8pening )alance of
5eserves and
surplus Gc
C5:85:965.77
To -losing )alance of
5eserves and surplus
Gc
CEE9DME7:.77
)y Funds from
operations
67ED76M5MM.77
1!2EEI2D1!.DD 1!2EEI2D1!.DD
58
Funs Flo. %tatement fo) t-e ;ea) 2D12-13
Ta1le !.2I
%ou)ces &mount &''lications &mount
5aising secured
loans
Funds from
operations
DEE8:CED8.77
67ED76M5MM.77
5aising 3hare
holders fund
:6CC88D:7.77
>ayment of un secured
loans
66MC67C9MD.77
$ncreasing !orking
in progress
8EED65E9.77 >urchase fi*ed assets C669EED65.77
$ncreasing !orking
capital
55796:957.77

2DG!FF3GH1.DD 2DG!FF3GH1.DD
58
Inte)')etation:-
$t is observed from table 9.:5 that the increase in !orking capital 55796:957.77G' in
the year :76:'6C.
The current assets of the company are increased comparing !ith previous year
results.
The current liabilities of the company are increased comparing the previous results.
To find the table 9.:D the company gains funds from the operation to an e*tent
67ED76M5MM.77G'
To find the table 9.:D the company deprecation is 675697:C6:.7
To find out the table 9.:D the company closing balanced of reserves and surplus is
CEE9DME7:.77G'
To find the table 9.:E the company increasing in !orking capital 55796:957.77G'
58
FINDIN9%
$t has been observed the share capital of company is not increasing from :77M to
:76C.
The company is having good reserves and surplus position. These are increasing year
to year from:77M to :76C.
The company is taking loans from other sources like banks, financial institutes etc. it
observed from :77M to :76C.
$t has been observed that the company is investing more on fi*ed assets from :77M to
:76C.
$t has been observed that the company is raising funds from secured and unsecured
loans, sale of fi*ed assets and funds from operations and it is spending to purchase
fi*ed asset, redemption of loans and other payments.
$t has been observed that the company made investments in :77M only. fter!ards till
:77M no ne! investments have been made.
The total increase in current assets of the company has overcome the total increase in
current liabilities in :77M to :76C.
58
$t has been observed that the net !orking capital has decreasing in :778'7M
"6C9896:C.M7# nd the company(s funds from operations is not satisfactory.
$t has been observed that the net !orking capital has decreasing in :77M'67
":77EM7EED.M7#. nd the company(s funds from operations are not satisfactory. 3o,
the company has to increase funds from operations.
$t has been observed that the net !orking capital has increasing in :767'66
CMD9EE7:C.77. nd the company(s funds from operations are satisfactory. 3o, the
company has to maintain same level of funds.
$t has been observed that the net !orking capital has increasing in :766'6:
8967C679.77G' nd the company(s funds from operations is satisfactory. 3o, the
company has to maintain same level of funds.
$t has been observed that the net !orking capital has increasing in :76:'6C
55796:957G' nd the company(s funds from operations is not satisfactory. 3o the
company has to increase funds from operations.
58
%U997%TION%
$t has been observed that the share capital of the company is not increasing from :778
to :77M. This is obstructing the gro!th of the company. .ence $ suggest the company
to increase the share capital.
$t has been observed that the company(s contribution to the fi*ed assets is gradually
decreasing through out the study. This !ould be a problem for the company procuring
funds. .ence $ suggest the company to focus on this and increase the allocation for
fi*ed assets.
$t has been observed that the company has made investments only in :778.
fter!ards there are no investments at all though all these years. This may affect the
reputation of the company in the public. .ence $ advise the company to increase
investments and improve its image.
$t has been observed that the increase in current assets of the company is less than
current liabilities in :778'7M. This sho!s that the company has less liquidity capacity.
.ence $ suggest the company to maintain the current ration to ::6 by increasing
current assets or reducing current liabilities.
58
The company is getting favorable funds from operations in all years of the study. This
is due to the e*cellence in operations. This is a good trend and it should be carefully
maintained.
$t is suggested that the position of the !orking capital in :778'7M has decreased. This
!ill have on effect on sources of funds of the company. .ence $ advice the company
improve the position of current assets than current liabilities and control the decrease
in !orking capital.
$t is advised that the position of the !orking capital in :77M'67 has decreased. This
!ill have on effect on sources of funds of the company. .ence $ advice the company
improve the position of current assets than current liabilities and control the decrease
in !orking capital.
$t is suggested that the position of the !orking capital in :767'66 has increased. 3o,
the company has to maintain same level of !orking capital.
$t is advised that the position of the !orking capital in :766'6: has increased. 3o, the
company has to maintain same level of !orking capital.
$t is advised that the position of the !orking capital in :76:'6C has increased. 3o, the
company has to maintain same level of !orking capital.
58
CONC"U%ION
The economic life of any organi+ation depends on some important
financial aspects like profits, e*penses. careful analysis of these areas is very much
essential for the success and survival of these organi+ations. For this purpose financial
statement analysis !ith the help of the technique like ratios, funds flo! etc. is to be carried
out. study of this type is very much useful for many organi+ations to keep into the
different financial aspects and to take some measures to improve in the above areas.

The company under the study of Tirumala milk products pvt ltd, being a
unit of the milk industry as to carefully !atch the trends in the milk industry as should come
for!ard !ith innovative marketing strategies.
58
BIBLIOGRAPHY
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