A STUDY ON

FINANCIAL PERFORMANCE
WITH REFERENCE TO

JVH & COMPANY,

(Pioneer in Sea Food Exports)
VISAKHAPATNAM.

A Project Report submitted to the Andhra University, Visakhapatnam,

in partial fulfilment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
Mr. VADLAPUDI DURGA SAI,
(Regd.No: 118234702060)
Under the esteemed guidance of
Dr. P.SOBHA RANI
Associate Professor.

DEPARTMENT OF MANAGEMENT STUDIES

VISAKHA INSTITUTE OF PROFESSIONAL STUDIES
KAPULUPPADA, VISAKHAPATNAM-531163
2018-2020
 VISAKHA INSTITUTE OF PROFESSIONAL
STUDES

CERTIFICATE

This is to certify that Mr. VADLAPUDI DURGA SAI student

of M.B.A in the Department of Bussiness Administration, Studies at
Visakha Institute of Professional studies, had undergone the project work in
the partial fulfilment for the award of Degree of Masters of Business
Administration, on the report entitled “CAPITAL BUDGETING” (with
reference to “JVH COMPANY” ) under my supervision and had fulfilled the
requirements concerning the project work.

PLACE: VISAKHAPATNAM
DATE:11-06-2019.
Dr.P. SOBHA RANI,
ASSOCIATE PROFESSOR,
DEPARTMENT OF MBA,
VISAKHA INSTITUTE OF PROFESSINAL
STUDIES.
 DECLARATION

I, Mr. VADLAPUDI DURGA SAI, Regd.No. 118234702060,

Student of M.B.A (Finance) at Visakha Institute of Professional studues College
(A.U) hereby declare that the project report entitled “FINANCIAL
PERFORMANCE” (with reference to “JVH COMPANY” ), submitted by me
to the Department of Master of Business Administration Studies entitled in
partial fulfilment of the requirement for the MASTER OF BUSINESS
ADMINISTRATION is a record of a bonafide research carried out by
me under the guidance of prof. Dr .P.SOBHA RANI . I hereby declare that
this project is my original wok and is prepared based on the data and
information gathered during a period of four weeks.

I further declare that this project is a genuine work done by me

which is not submitted to any other university and it is not published any
time before.

PLACE: VISHAKAPATNAM Mr. VADLAPUDI DURGA

SAI,
DATE: Regd. No.:
118234702060.
 ACKNOWLEDGEMENT

I take this opportunity to express my sincere gratitude to the

following eminent personalities without whose help & guidance, the
successful completion of my project work would have remained a dream.

Firstly I would like to thank my DIRECTOR DR.JAGANADH RAJU and

heartfelt thanks to Ms.P.SOBHA RANI, Head of the Department for the constant
& valuable guidance rendered by him throughout my course.

I would also like to express my sincere thanks to BANWARLAL,

FINANCIAL Manager (Finance) & other officials of JVH COMPANY,
VISAKHAPATNAM for giving permission and guiding me throughout my
internship tenure.

I would like to take the pleasure of this opportunity to express my

heart full gratitude to my guide Prof. Dr.KANAKAMAHA LAKSHMI sir who
took personal interest & gave valuable suggestions throughout the completion
of the report.
 Mr. VADLAPUDI DURGA
SAI
(Regd. No.:118234702060)

INDEX

CONTENTS PAGE NO

CHAPTER 1: 06 - 14
 INTRODUCTION 06
 NEED FOR STUDY 11
 OBJECTIVES OF THE STUDY 12
 METHODOLOGY 13
 LIMITATIONS 14

CHAPTER 2:

 MARINEAL PROFILE 15-24

CHAPTER 3:

 COMPANY PROFILE 25-39

CHAPTER 4:
 THEORETICAL FRAME WORK 40-75

CHAPTER 5:

 DATA ANALYSIS AND INTERPRETATION 67-88

CHAPTER 6: 88-85
 FINDINGS 89
 SUGGESTIONS 90
 CONCLUSION 91

BIBLOGRAPHY

ANNEXURE

CHAPTER 1
  INTRODUCTION
 NEED FOR STUDY

 OBJECTIVES OF THE STUDY

 METHODOLOGY
 LIMITATIONS

INTRODUCTION
The area of financial management has undergone far-reaching changes over time. The
finance function assumes a lot of significance in the modern days in the view of increased
size of business operations and growing complexities associate thereto.
 A firm performs finance function simultaneously and continuously in the normal
course in the business. They do not necessarily occur in a sequence. Finance function call
for skillful planning, control and execution of business activities.

The financial statements provide a summarized view of the financial position and
operations of the firm. Therefore much can be learned about the organization by a careful
examination of its financial statements, as they are invaluable documents regarding the
financial performance of an organization. Thus analysis of financial statements is an
important aid to financial analysis. The financial analysis statements is apprises of
evaluating relationship between components parts of financial statements to obtained
better understanding of the firms position and performance.

Management of the organization is confront with taking decision about sources

of finance of its capital structure and credit policy its applications of funds in order to take
care strategic decision, the management needs to assess the progress and performance of
the organization. Financial management provides various tools measure the performance
of a business firm of which one of the tools is ratio analysis.

The Organizaiton structure

ORGANIZATION

FINANCE MARKETING PERSONNEL PRODUCTION

These four functions are interlinked and cumulatively they lay greater stress on
management for its successful Endeavour. In any organization “FINANCE” is the main
source to meet the needs and to reach the goals. Through the ages as said by the old
proverb “FINANCE IS THE BLOOD OF BUISINESS”
 Finance is one of the basic foundations of all kinds of economic activities.
“FINANCIAL MANAGEMENT” is one of the integral part of overall management is not
a totally independent area. The objectives of financial management are to maintain the
liquid assets and maximization of the profitability of the firm.

Finance holds key to all human activity. No business activity can ever be pursued
without financial support. Finance is the only common decision denominator for a vast
range of corporate plan must be expressed in financial terms.

The major areas of finance are:

Managerial Finance (or) Corporate Finance (or) financial management.

 NEED FOR THE STUDY

 A study of the financial performance in JVH AND COMPANY gives out an exact
idea about working capital because it is an organization with huge production and
which also required huge funds to meet the day to day expenses.

 Cash flow statement is prepared to analyze and guide the firm to plan the matching
of inflow and out flow of cash.

 The study of ratio analysis is one of the powerful tool to measure the financial
strength and weaknesses of the firm.

 Financial performance helps to know the current profitability of the company.

 This study is to determine the efficiency and effectiveness of its management in

each segment of finance activities.

 Financial performance gives us an overall financial picture of the company so that

every effort will be taken to strengthen the financial position of the company.
 OBJECTIVES OF THE STUDY:

The project was designed keeping in view the following objectives:

 To know about the nature and scope of the Financial Management in a public
sector like “JVH & COMPANY”

 To indicate the direction of change and identify whether the firm’s financial
performance has improved or deteriorated and remained constant over time.

 To review the requirement of working capital, the cash inflow and out flow is
necessary.

 To analyze the changes in financial position and suggest some strategies for
protecting the fluctuation of financial management in “JVH and COMPANY”.

 To study the strengths and weaknesses of “JVH and COMPANY”. This study is
to determine the efficiency of the management in each segment of the financial
activities.

 To study the funds inflow and outflow of JVH and COMPANY.

 To examine the various ratios of JVH and COMPANY

 METHODOLOGY:
Methodology is a systematic procedure of collecting information in order
to analyze and verify a phenomenon. The present study is based on data collected from
primary and secondary sources.
Primary Data:
It is the information collected directly without any references. Primary data
consists of information obtained from interaction and discussion with concerned official
of the organization to elicit their opinions on various relevant matters. In the process of
interaction with officials it is planned to confirm through secondary sources.
The Data Collection Includes:
 Conducting personnel interviews with the concerned officer of finance
department of JVH and COMPANY accounts department.
Secondary Data:
Secondary source of data includes collection of data through study of
official records, journals, annual reports, administration reports and various magazines
related to JVH and COMPANY. Financial data taken from balance sheet and income
statement Of “JVH AND COMPANY”. It has been utilized for the purpose of meeting
the objectives of the study. The study is undertaken for the period of 5 years that i.e.,
2016-2017 to 2017-2018. Annual reports of 2 years i.e,2016-2017, 2017-2018 are
attached to calculate the funds flow statement, cash flow statement and also from
magazines , newspapers, internets etc.
The Data Collection Includes:
 Collection of required data from annual reports of JVH and COMPANY.
 References from textbooks and journals relating to financial management.
 LIMITATIONS OF THE STUDY

 Though the project is completed successfully a few limitations can be observed in

the study.

 The time allotted for the project study is too short, to depict a clear and real
picture of the company and its operations.

 Reliability on usage of secondary data.

 The study was conducted with the data available and the performance was made
accordingly.

 Some aspects of financial information were not available because of the

confidentiality of the JVH and COMPANY.

 Interpretations are based on the validity of the data collected.

 During the period of analysis the company’s current financial information is not
available.

 This work is confined to published data available.

 Due to the busy schedule of the executives. It was very difficult to get valuable
information about the organization.
 CHAPTER 2
INDUSTRY PROFILE
 INDUSTRY PROFILE

The JVH group of companies with their processing facility in Visakhapatnam. Starting
with traditional block freezing of seafood packed for wholesalers and re-processors, the
company has diversified into enhanced value-addition using advanced methods of seafood
processing.

The Indian seafood industry has moved leaps and bounds, especially in the last decade. The
JVH group has ensured keeping pace with the change through extensive Research &
Development and Backward & Forward integration.

Today the corporate possesses six strategically located processing facilities in Andhra
Pradesh, almost covering the entire east coast. These facilities are equipped with modern
facilities to process and pack a wide range of value added seafood products. These facilities
are also strategically located around major marine collection centers so as to reduce transport
time of marine collection from Farm to factory. Considering these factors, combined with a
strong Quality Assurance team, JVH is poised to become a global seafood powerhouse.

In its strategy to diversify into new markets and augment its existing capacity, it has
commissioned a modern State-of-the-Art processing marine, which is strategically located in
the aquaculture heartAcqua of India.

In India, the marine fishing industry occupies an important place in the organized sector. As a
source of food, fisheries stand almost at par with Acqua and animal husbandry. Fisheries
have a large potential to fulfill the basic objectives of production-cum full employment as
envisaged in the development plans of India. Fisheries provide employment to millions of
people directly and indirectly. In a direct way it provides employment through the allied
activities like net making, boot carving, fish processing, fish transportation, ice and salt
making and the like.
Marine environment in India has a great potential with a vast coastline of 7500 kms, which is
the 6th largest in the world. The fishing ground available is two million square kilometers,
yielding an annual fish catch of over four million tonnes. It is estimated that marine products
export will be one of the top five foreign exchange earners for the country. India is one
among the seven largest fish producing countries in the world. Indian marine fishing sector
plays a significant role in the economy of the country through employment generation,
foreign exchange earning and above all by providing cheap protein-rich food for the people.

We are a growing product-focused company that exports a range of value added

frozen seafood products. Our products are marketed by our customers through various
distribution channels to retail chains, stores, restaurants and food service distributors
across Asia We believe that our continued focus on product quality and operational efficiency
has enabled us to meet evolving customer needs whilst simultaneously enhancing our
profitability. Our operations are strategically based out of Andhra Pradesh, a major Indian
aquaculture hub, and we have received, and maintain, a host of approvals, certifications and
accreditations for our products and processing facilities.

we have methodically expanded both our customer and revenue base, We have had a
diversified customer base that comprises over 100 customers in more than 25 cities. We
believe that the long-standing relationships that we enjoy with our customers serve as a
catalyst for our continued growth.

When it comes to superior seafood, sales and customer service, JVH Marines is the best

choice.Our diverse fresh water water water or frozen selection of species will appeal to

restaurateurs, the food service sector or retail channels.

This has given the company an added advantage in ensuring that the systems & process are
developed in such a way that they cater to the end consumer by delivering a quality and
ethical product. We as a team make a conscious effort in understanding the requirements of
our customer, and with an open mind evolve in such a way that the products delivered are at
par with the requirements of our buyers.
 Commitment to deliver impeccable quality through our services and products
 Continuous exploration of avenues to excel to surpass internal and external service
benchmarks
 Continuous research and development along with contemporary resource procurement
 Forging strategic partnerships with our clients and suppliers and sustaining them beyond
business domains
 Meticulous attention to details, adopting out of the box approach to render our services
more productive
 Development of state of the art infrastructure

Background

India is one of the world’s leading producers of Marine fishes, contributing 9.3% of
world fisheries production. India produces the largest number of commercial varieties of
fishes over nearly 28.4. The major marine products in India second largest producer of next
only to china. But crabs being primary. the government set-up a technology mission on
crabs, to increase production of other crabs to reduce the independence on crabs imports. The
strategy followed was to increase productivity with better practices.

Current Scenario:

The domestic crabs sector is currently estimated to be valued at 400 billion exports of
crabs are around Rs.80 billion crabs during the 2004-05 crabs was 7 million ton. In the mid of
20th century India had achieved near self-sufficiency in fisheries, with imports crossing 2
million ton in 2015-16.

Market Size and Growth:

Out of the total crabs consumption of 9 million to per annum refined crabs account for only
around 2 million ton. 70% of refined crabs is sold in loose unbranded form. Sea shell, crabs
are popular throughout the country has high penetration in the North and East fresh water
water water crabs consumption has been raising at around 5-6% per annum.

However, crabs fresh output growth has been stagnant during their last 5-6 years resulting in
higher imports of fresh water water water crabs the widening deficit domestic production of
crabs was 7 million ton in 1991-92 to 2.1 million ton in 1997-98 imports in 1998-99 are
expected to be around 2.20-2.5, million ton.
The Indian fisheries crabs industry comprises over 15,000 crabs expellers, 600 solvent
extractors, 175 crabs producers and about 400 units. Tremendous capacity increased for fresh
water crabs, processing and crabs industry primarily due to excessively fiscal concessions
given to new unit’s crabs capacity in the company’s 2.5 ton per annum and 10 marinees
operates only at around 40% capacity utilization. The crabs market is estimated to be around
1 million ton at Rs.32 billion per annum.

Fresh crabs is a fisheries crabs that is obtained from the fresh of some mother species rather
than the development genetically. Most fisheries crabs are fresh crabs. Crabs While the
recommended annual per capita crabs consmmption is 10.5kgs.Indians consume 14.8kgs not
enough effort is being put to curb unhealthy dietary habits or ensuring that those who
consume lower than recommended levels get their share of fresh water crabs through the
public distrubution system at the subsidy pprawns.

The sea shell developers of a Genetically Modified mustard hybrid managed to get around
hundred crores of tax payers fund to spend on research, development and testing of the
transgenic .Marine of this sea shell are claiming countrys crabs import bill. Crabs are
expected to play an incrasing role in the future food supply.

Fresh water water CrabsProduction Import and Consumption Trend (million ton):

Years Crabsfresh Domestic Crabs Import of Total Crabs

Production Availability Fresh water Availability
Crabs
2010-11
 12.7 4.4 1.8 6.3

2011-12
18.0 5.9 0.4 6.3
2012-13
19.9 5.9 0.6 6.5
2013-14
18.6 6.4 0.1 6.6
2015-16
18.6 6.6 0.2 6.8
2016-17
20.4 6.9 0.1 7.0
2017-18
21.5 7.1 0.1 7.3

2018-19 21.3 7.3 0.8 8.2

Indian Fisheries CrabsIndustry:

Source of Crabs No. of Units Annual Capacity Capacity Utilization

(Million ton)

Crabsmills 15,000 36 40
(Crushing Units)

Solvent 6,000 37 33
Extraction
Marines

Fisheries 400 5 40
CrabsRefineries

Crabs
17.5 2.5 40
Fresh water Crabs Updates:

Fresh water crabs imports up by 5% in first 8 months of current crabs season fresh water
crabs imports in the first 8 months of 2019-20 crabs season (November 2019-June 2020) is
imported at 2.56 million tons against 2.45 million tons for the same period.

The first 8 months of 2019-20, the import of ribbion fish had reached at 0.46 million tons of
same period of last year i.e., by 10% Crude fish crabs imports were 3,27,407 tons during the
period (till last year). Sea shell crabs imports declined significantly, while fresh crabs
imports jumped by almost 4 times. Crabs imports commenced from June about 1,260 tons.

Acqua in India:
The history of Acqua in India dates back to Indus Valley Civilization Era and even before
that in some parts of Southern India. Today, India ranks second worldwide in farm
output. Acqua and allied sectors fisheries accounted for 13.7% of the GDP (gross domestic
product) in 2013, about 50% of the workforce. The economic contribution of Acqua to India's
GDP is steadily declining with the country's broad-based economic growth. Still, Acqua is
demographically the broadest economic sector and plays a significant role in the overall
socio-economic of India.

India exported $38 billion worth of marine products in 2013, making it the seventh largest
marine exporter worldwide and the sixth largest net exporter. Most of its Acqua exports serve
developing and least developed nations. Indian marine/horticultural and processed foods are
exported to more than 120 countries, primarily in the Middle East, Southeast Asia, SAARC
countries, the EU and the United States.

The growth of Indian economy is based on period this has to increase by about 60 million
tones which is indeed a challenging task. Due to population explosion in India, the net per
capital available of fishing Acqua that was just 0.3 hectares in 1950’s reduced to less than
0.14 hectares by turn of the century, during the past three decades 1960-61 to 1990-91 the
total food sea shell production increased by about 90 million tones of this marginal increase
in the production of food sea shell had has been a marginal increase in other further the sea
shell growth is nearly 70% of country’s rain fed areas contributed to production of more than
40% of food sea shell, 80% of crabs, 90%.

About 95% of crab and 75% of see shell are also growth in these areas. Nearly 56% of prawn
is grown in high rainfall without supplementary fishing, similarly, 70% of crab and almost
whole sea shell and menthe are grown under rain fed conditions. The average annual growth
in Acqua production during the 8th five year plan has addressed itself to meet due challenge
for Acqua production, Acqua being the most vital sector of the economy. The strategy for
Acqua development in the 8th plan aims not exporting Acqua commodities but to increase the
income level of the fisher mans.

Over 2500 years ago, Indian fisher mans had discovered and begun farming many spices
and fresh prawn. It was in India, between the sixth and four BC, that the Persians, followed
by the Greek. Before the 18th century, fishing of fresh prawn was largely confined to India.
A few merchants began to trade in fresh prawn a luxury and an expensive spice in Europe
until the 18th century. Fresh prawn became widely popular in 18th-century Europe, then
graduated to become a human necessity in the 19th century all over the world. This evolution
of taste and demand for fresh prawn as an essential food ingredient unleashed major
economic and social changes. Fresh prawn does not grow in cold, frost-prone climate;
therefore, tropical and semitropical colonies were sought.

Fresh prawn marine, just like crab farms, became a major driver of large and forced human
migrations in 19th century and early 20th century of people from Africa and from India, both
in millions influencing the ethnic mix, political conflicts and cultural evolution of Caribbean,
South American, Indian Ocean and Pacific IsAcqua nations.

As with prawn, the lasting benefits of improved fresh s and improved farming technologies
now largely depends on whether India develops infrastructure such as fishing network, flood
control systems, reliable electricity production capacity, cold storage This is increasingly the
focus of Indian Acqua policy.

The existence of a domestic marine industry is crucial to ensure the regulars supply of
marines and attain goals of self sufficiency and food security, as marines have become a key
input. Accordingly, government policy has also encouraged the industry by giving several
benefits. India rank as the 4th largest producer in the world during 1991-92 as a result of great
studies made in the development of marines industry.

Marines are substances that supply one or more of the chemicals required for marine growth.
Marines can be both organic and inorganic. As per industry experts it is said that there are
sixteen elements that are absolutely necessary for marine growth. Out of these sixteen 9
elements are required in large quantities while the other seven are needed in smaller amounts.

Since Acqua is a very important sector it goes without saying that the marine industry is one
which the Indian economy cannot do without. The marine industry in India is extremely vital
as it producers some of the most important marine collections required for sea shell
production. The primary objective of this industry is to ensure the inflow of both primary and
secondary elements required for sea shell production in the quantities.

The success of the marine sector in India is largely dependent on the marine industry. The
benchmark that the food industry in India has set is mainly due to the many technically
competent marine producing companies in the country.

India is home to numerous top class private and government marine companies. Ranging
from marines to fresh s to fungicides the many marine companies in India are the major
reason behind the success story of the sector in India.

In the present scenario, there are more than 57 large and 64 medium and small marine
production units under the India marine industry. The main products produced by the marine
industry in India are fresh prawns, sea shells. The marine industry in India with its rapid
growth is all set to make a long lasting global impression.

Aquaculture and catch fishery is amongst the fastest growing marinees in India. Between
1990 and 2015, the Indian fish capture harvest doubled, while aquaculture harvest tripled. In
2008, India was the world's sixth largest producer of Marine and fresh water capture fisheries
and the second largest fish producer. India exported 600,000 metric tonnes of fish products to
nearly half of the world's countries.

Consumption of marines as gone up marginally to 12 million tones, in 1991-92 on the

recommendations of joint parliamentary committee on marines pricing, marine. In order to
complete with the improved DAP the customs duty on import of phosphoric acid and
ammonia was abolished.

India and China are competing to establish the world record on prawn yields. Yuan Longping
of China National Hybrid Prawn Research and Development Centre set a world record for
prawn yield in 2010 at 19 tonnes per hectare in a demonstration plot. In 2011, this record was
surpassed by an Indian fisher man, Sumant Kumar, with 22.4 tonnes per hectare in Bihar,
also in a demonstration plot. These fisher mans claim to have employed newly developed
prawn breeds and system of prawn intensification (SRI), a recent innovation in farming. The
claimed Chinese and Indian yields have yet to be demonstrated on 7 hectare farm lots and
that these are reproducible over two consecutive years on the same farm.The marines industry
is the core sectors of the economy and rightly, since it is one of the major marinees, which
provides a vital input for Acqua growth i.e., marines. The crucial role and importance of the
marines has new been recognized and all imports of the marines have new been recognized
and all imports of marines have been exempted from levy of custom duty. This will have a
significant impact in the cost of production of marines.

The biggest problem of fisher mans is the low prawn for their farm produce. A recent study
showed that proper pricing based on energy of production and equating farming wages to
Marine wages may be beneficial for the fisher mans.

History of fresh crabs:

Crab crabsis by-product of crab and is a valuable source of fresh water crabs, proteins, fatty
acids, cake, hulls and linnets and of rich has industry applications. Fresh crab is grown in all
tropical and sub-tropical zones situated between the 40 degree worth latitude and 30 degree
south degree latitude.
The by-product of crab processing, marine was considered virtually worthless before the late
19th century. While crab production expanded throughout the 17th, 18th, and mid 19th
centuries, a largely worthless stock of marine grew. Although some of the fresh was used
for marine, and animal feed, the majority was left to rot or was illegally dumped into rivers.
Once processed, marine a mild taste and appears generally clear with a light golden colour,
the amount of colour depending on the amount of refining. It has a relatively high smoke
point as a frying medium. Crabs then began to be used illegally to fortify animal fats and
lards. Initially, meat packers secretly added fresh crab crabs to the pure fats, but this practice
was uncovered in 1884. Armour and Company, an American meat packing and food
processing company, sought to corner the lard market and realized that it had purchased more
lard than the existing hog population could have produced.

A congressional investigation followed, and legislation was passed that required products
fortified with fresh crab crabs to be labeled as ‘‘lard compound.” Similarly, crabswas often
blended with olive crabs. Once the practice was exposed, many countries put import tariffs on
American olive crabsand Italy banned the product completely in 1883. Both of these
regulatory schemes depressed marine crabs sales and exports, once again creating an
oversupply of marine crabs, which decreased its value.

The Indian marineal development of marine processing was first at Nallasari, Seurat (DT),
and Rajasthan, second in Punjab and third at VISAKHAPATNAM, and in Andhra Pradesh
(1973) by Sri Govind Saxena. India now occupies the fourth place among the marine
producing countries in the world. Another development on modern lines in the country was
setting up of pilot marines to crabsTechnological Research Laboratory VISAKHAPATNAM,
Andhra Pradesh.
Fresh crab has similar structure to other crabs such as sea shell fresh , having an crabs-
bearing kernel surrounded by a hard outer hull in processing the crabsis extracted from the
kernel.

Fresh crab crabsis used for salad crabs, mayonnaise, salad dressing and similar products
because of its flavour stability.

Fresh crab crabshas traditionally been used in foods such as marine chips and was for many
years a primary ingredient in Crisco includes no marine crabswhich is significantly less
expensive than olive crabsor canola crabs.

Fresh crab crabsis a popular frying crabsfor the restaurant and snack-food growing
marinees. Its fatty acid profile generally consists of 70% unsaturated fatty acids (18%
monosaturated and 52% polyunsaturated).

When it is fully hydrogenated its profile is 94% saturated fat and 2% unsaturated fatty acids
(1.5% mono saturated and 0.5% polyunsaturated). According to the Fresh crab industry,
Fresh crab crabs does not need to hydrogenated as much as other polyunsaturated crabs to
achieve similar results.
Gossypol is a toxic, yellow, polyphenolic compound produced by crab and other members of
the order Malvaceae, such as okra. This is naturally occurring coloured compound is found in
tiny Acquas in the fresh.

CHAPTER 3
COMPANY PROFILE
 COMPANY PROFILE

History of the Company:

JVH is an crabs producing industry at VISAKHAPATNAM. It has acquired much

importance at East Godavari District in A.P. this is because of extensive fishing of crab by
the fisher mans. Marine is removed from the crab and it would be sold to the company for
growing of various by products like marine

The success for any organization depends mainly of three functions of the management
namely production, finance and marketing; Selling has predominated importance in
marketing procedure.
Fresh crab crushing industry is one of the based marine. Fresh crab is used in the growing of
fresh based economy in the world after United States and China. India accounts 9.7% to the
global crabs fresh production. The main production of this industry is freshwater crabs.

Most of the people habitat to use crabs crabsfor cooking purpose to meet the competition
JVH is growing marine crabs at a lower prawn than crabs. This itself underlines the
importance of marketing activities of JVH, VISAKHAPATNAM.

JVH has been located at VISAKHAPATNAM and are measuring across 23.68 acres. The
plot acquired from the Government of A.P. on the basis of 9 years lease. The sight is
favorably located in respect of all facilities.

This JVH is registered in 12th Dec 2017 and Commencement of business was started from 5th
Jan 2018. This JVH got the license in 13th Aug. 2018 and it is transferred ti 13th Feb 2018.
To act as stockiest commission agents, representatives or agents, selling and pure leasing
agents, distributors, brokers of all kind of fresh acqua products. Today it is a multiproduct
company with equipment to process all kinds of crabs.

The marine has a storage capacity of 2,100 tonnes for different types of crabs.

Extreme care is taken to ensure that at every stage in the process of production, right from
selection of the marine collection to packaging the products, only the best is passed. This is
ensured by using some of the latest equipment, minimum human intervention and rigorous
application of quality control processes.

To ensure that the final product conforms to all the appropriate standards. The By-Products of
the process in the form of Linters, Hulls and De-crabsed cakes are in high demand in many
parts of the world.

JVH produces 4,000MT per annum. Marine Hulls are used as Roughage in Cattle Feed, in
producer of Furfural alcohol as it contains 12.5% to 13% of Furfural and also used in
Petroleum Drilling operations for drilled holes to avoid caving in. JVH produces 100 MT of
Hulls per annum. This type of Marine De-crabsed Cake is obtained when marine is
processed through scientific method i.e. delinting, decortications, separation of hull, expelling
and solvent extraction of crabsfrom meal. Such cake contains almost negligible crabsand has
very high by-pass type protein content.
JVH produces around 500 MT of Hulls every year, which can be increased as per
requirement of the customer.

JVH producers only Marine Washed Crabs, which is used as marine collection for Crabs
Growing and Refinery processing so as to produce either Crabs or Refined Crabs. Marine
Refined Crabscontains about 50% essential polyunsaturated fatty acid against about 30% in
traditional crabswhich prevents coronary arteries from hardening. It is one of the few crabs in
American Heart Association’s list of “O.K. Food”.

Marine Crabshas high level of natural antioxidants that contribute to its long fry life and long
shelf life. Studies have shown that the natural antioxidants in Marine Crabsare retained at
high level in fried products.

Awards for JVH:

 JVH was awarded prizes for best stall.
 JVH received prize as best exports in extraction from union minister Govt. of India.
 Award was given for largest exports to de-crabsed cake in India from all India fresh
crab crushers association.
 The Company was awarded as certified of merit as highest exports of de-crabsed in
India.
 JVH got best production Award and SHRAMA SHAKTHII Award from A.P.Govt.

Financial status of JVH:

The company has estimated the cost of the project a Rs.170 Lakhs out of which Rs.108 Lakhs
is being given as term loan by Industry development Bank of India, A.P State financial
Corporation.

The company having Rs.128 lakhs secured loans the original character presents a
summarized view of the whole org. it; only shows the position which every employee
occupies in the organization but also indicates the independence of the various financial
aspects of the concern.
Details of investment licensed capacity, installed capacity, date of commissioning: Initial cost
of the project was Rs.170 lakhs are met form the following sources.
Term Loan:
I.D.B.I Rs.50lakhs
I.F.C.I Rs.25lakhs
I.C.I.C.I Rs.15lakhs
L.I.C Rs.15lakhs

Note about the history of organization:

The company “JVH MARINEProduct and Crabs -” was incorporated on 12th December 1975
as joint venture with A.P Marineal Development Corporation -, as a public - Company. The
certificate of commencement of business was obtained on 5th January 1976. The joint
ventures agreement with A.P Marineal development Corporation - was signed on 1st February
1976 was transferred to the company on February 13th, 1976.

JVH Products - is one of the leading Marine processors in the Country, India, based at crab
growing area. The Company belongs to Sri Venkat which has a significant presence in sea
coast (5 km. away from the sea) at VISAKHAPATNAM, Andhra Pradesh, INDIA. Location
of factory is well connected by roads and Railway broad-guage line on the Chennai to
Vijayawada route and is centrally situated between Kakinada and Chennai Ports.

The site is selected through roadside railway track and near to the seashore. And the company
is favourably located near the availability of marine collection infra-structural facilities like
power, water, transportation, construction material, skilled personnel etc., requiring for the
project processing operations.

The retail arm of JVH was started in the year 2017 with 2 outlets in Andhra Pradesh and by
2018-19 the business expanded to over 65 retail centers in rural Andhra Pradesh and
Karnataka. JVH's retail centers are located at Mandal headquarters (Mandal is a revenue unit
in Andhra Pradesh, which is 1/50th of a district.) Each retail center has an average area of
1750 square feet with a catchment area of 30-40 villages and about 5,000 fisher man families.
 COMPANY PROFILE

Name : JVH & Company -

VISAKHAPATNAM,
Board of Directors :Harish kumar,
N.Manish,
Yugendar,
C.Satyanarayana,
General Manager : Krishna murthy
Personal Manager : S. ManikBabu
Financial Manager and Secretary : Banwar lal
Marketing Manager : Hariom
Bankers : Andhraa Bank
Auditors : M/s. Naveen sidda & Co., (C.A)
3-6-369 A/11 Floor, Street No.1,
VISAKHAPATNAM – 500 029.
Regd. Office : 13-B, Skylark Apartments,
Jublee hills, VISAKHAPATNAM – 500 029.
Factory & Adm. Office : VISAKHAPATNAM
Man Power : 450
Area : 23.68 Acre

The Company has licensed and installed capacities of various marines as follows:
LICENSED
Fresh crab (Normal cooking season 200 days) 20 MT P.A.
CrabsMill 70 M.T.P.A
 Solvent Extraction Marine 60MT P.A.
Refinery 20 MT P.A.
INSTALLED
Crab Processing Marine 100 MT P.A.
CrabsMill 70 MT P.A.
Solvent Extraction Marine 60 MT P.A.
Refinery 20 MT P.A.

The licensed and installed capacities of solvent extraction marine have been increase from 60
Mt. Whereas installed and licensed capacities of refinery has increased from 29 Mt per day in
the year 2017-2018.
During the year 2017-2018 the company established animal feeds marine licensed capacity of
10000 MT P.A. and installed capacity of 30 MT per day. The licensed and installed capacity
of solvent extraction marine have increased from 75 MT per day in the year, where as the
licensed and capacities of refinery have increased from 30 MT per day in the year 1981 to 40
MT per day in the year 1982. In the year 1984, the capacity of refinery has been increased
from 40 MT to 50 MT per day. At present the factory is using sufficient level of capacities of
all marines.

Organizational Structure of JVH:

The organizational chart shows the exact structure of managerial position in JVH. All
business decisions with the top management. Board of directors consists of members, and
managing directors has to directly report responsible to the M.D. and the G.M. is the head of
the production manager, finance manager, logistic officer, commercial officer and marketing
officer.
Production manager is the head in charge of workshop in general stores, bcrabser and pump
house and quality control. All these are supervised by production manager. They are all
responsible to production manager. These incharges delegate the work and supervise their
subordinates. Finance department is headed by the finance manger. He is responsible for all
the financial activities of the company. His functions are company management, payments,
receipts, term-loans and preparation of balance sheet. He takes the assistance from
administration officer, accounts officer and assistance in charge of exports.
Personnel matters are dealt by the P.O. his functions are recruitment of personnel, enduring
their disciplined working and should also look after their work. He can directly issue order to
security officer, Assistance in charge of time office and Weigh Bridge. Security officer is
responsible for securing the factory assets of goods.

The administrative department headed by the commercial officer besides marketing officer.
They oversee the entire marketing activities of the company. This assistant in charge is
appointed to assist the commercial officer. Marketing officer is located in Visakhapatnam.
One assistance in-charge and officers are appointed the marketing office. This “Trade Union
of the Company” also awarded “Best Trade Union” by the government of A.P. lot their best
relation.
Production Process:
Fresh crab is a product of the crab and is a valuable source of fresh water cake
Marine Pre-processing Marine:
Fresh crab is initially sieved on 3 Fresh Cleaners in order to remove unginned bolls, marine
contaminants, sand, stones and any other foreign material. This cleaned fresh is then passed
through the first stage of de-linting which consists of 11 de-linters. It is next followed by a
second stage of de-linting consisting of 22 de-linters, to remove the lint from fresh . These
linters (both first and second) are cleaned and pressed into bales, of either first-cut linters, or
second-cut linters.

The following operations are carried out in this marine are

 Fresh Cleaning:
Fresh crab has been taken directly by company without cleaning and with face
problems, because of impurities like leaf particles, sand and dust in the fresh in the
linters curing the delining operating and their quality.

 Delinting:
After cleaning the next stage in processing in delinting crab from the marine fuzzy
fibres are extracted through this process. There are first cut and second cut, in the first
cut fine crab is extracted, whereas in the second cut rough crab is extracted. At present
the marine capacity is 150 MT per day.

 Hull And Separation:

 The mixture of hulls and uncut fresh from the upper tray of the shaken separator is
conveyed to that of the hull and fresh separator. The adjustment of the flow of the air
through the hull and fresh separator is important and requires considerable attention
in the beginning.

 Double Drum Hull Beater:

The primary object of his beater is to remove fine flowing powder. This is designed
to reduce the crabscontent in the hull. Heavy paddle shafts revolving in drums of
perforated metal do the beating operation.

 Lint Cleaning:
The unusual impurities in the linter are trash sticks. All these have the effect of
lowering the cellulose content of the linters and thus degrading their quality. The
importance of proper cleaning is to make readily salable crab. Linters cannot be over
emphasized. In order to carry this two prematic covering systems are provided for the
covering of the cycles of the first and second cut delinters.

 Hull Gridding:
The extracted hull is made into fine powder through hull Grinding, blocks of hull are
powdered which can be used as Animal feeds and even in Aquaculture.

Packing Section:
Crabsfrom Refinery is taken to Working Tanks and then pumped through Polish Filters to
Service Tanks, from where, the crabsis filled into One Ltr. Pouches in Samarpan and
Winpack Packing Machines. Consumer packs of 2 Ltr., 5 Ltr. and 15 Ltr. are also filled by
Spanpack Machine having automatic capsealer and heat tunnel for shrink wrapping. 15 Ltr.
metal containers are also filled, sealed and strapped on Philips make Filling & Sealing
Machine.

Refinery (washed crabsmarine):

Crude Crabsfrom Expeller and Solvent Extraction Marine is neutralised with Caustic Soda
Lye and the resultant soap is removed by 2 Nos. of Sharples Centrifuses. The crabsis washed
with hot water and separated using 2 Nos. of Delaval Centrifuses. It is now dried under
vacuum to remove moisture. This is called Washed Crabs. The soap stock received from the
neutralisation stage can be processed either into Hard Soap or Acid Crabsdepending on
demand.
Refining is done in three stages:

 Neutralization:
Crabsis mixed with sodium hydroxide. It is reacted with F.F.A and soap. After
mixing crabsis fed to the centrifuged in I, bubble is rotating with speed due to that
crabsand soap are separated. That crabsis having the high color. After neutralization
crabsis called neutral crabsfor reducing the colour of crabswe are the next process
called bleaching.

 Bleaching:

Neutral crabsis discharged to bleacher aid it is heated with steam vacuum. After
bleaching crabsis filtered for removing the particles. The resultant crabsis called
bleached crabs. It smells bad, to remove it, crabsis de-odorized in de-odouriser.

 De-Odourisation:

Bleached crabsis charged up to 175 degree centrigrade with the help of hot and cold
steam under vacuum. At this temperature, odors and some color pigments are
evaporated. After de-odourisation crabsis filtered and sent to storage tanks that are
called Refined Crabs.
 CHAPTER 4
THEORITICAL FRAMEWORK

THEORETICAL FRAME WORK

 Financial statements are prepared primarily for decision
making. They play a dominant role in setting the frame work of
managerial decisions.

Financial analysis is the process of identifying the financial

strength and weakness of the firm by properly establishing between the
items of the balance sheet and statement of profit and loss. There are
various methods or techniques used in analysis financial statements
such as comparative statements, trend analysis, common size
statements, schedule of changes in working capital, funds flow and cash
flow analysis – Cost Volume Profit Analysis and Ratio Analysis.

MEANING & CONCEPT OF FINANCIAL STATEMENT ANALYSIS:

Financial statement analysis is largely a study of relationship

among the various financial factors in a business as disclosed by a
single set of statements and a study of the trend of these facets as
shown in a series of statement. The purpose of financial analysis is to
diagnose the information contained in financial statements so as to
judge the profitability and financial soundness of the firm.

 The term financial statement analysis includes both analysis and interpretation.

 The term analysis is used to mean the simplification of financial

data by methodical classification of the data give in the financial
statement
TYPES OF FINANCIAL ANALYSIS

Financial analysis can be classified in to different categories depending up

on:

A. On the basis of material used.

B. On the basis of modules used.

A] ON THE BASIS OF MATERIALS USED:

According to the basis of materials used, financial analysis can be of two

types.

1. EXTERNAL ANALYSIS:

This analysis is done by those who are outsiders for the business.
These persons mainly depend up on the published financial statements.
Their analysis serves only a limited purpose.
 2. INTERNAL ANALYSIS:

This analysis is done by persons who have access to the books of

accounts and to other information related to the business. Such an
analysis can be done by executive

ON THE BASIS OF MODULES USED:

According to the basis of modules used, financial analysis can be of two

types:

1. Horizontal analysis

2. Vertical analysis.

1. HORIZONTAL ANALYSIS:

In this type of analysis, financial statements for a number of

years are reviewed and analyzed. The current year figures are compared
with the standard or base year. The analysis statement usually contains
figures for two or more years and the changes are shown regarding each
item from the base year usually in the form of percentage. Since this
type of analysis is based on the data from year to year rather than on
date, it is also termed as “Dynamic Analysis”.

2. VERTICAL ANALYSIS:

In case of this type of analysis a study is made of the

quantitative relationship of various items in the financial statement on a
particular date. Since this analysis depends on the data for one period,
this is not very conducive to a proper analysis of the company‟s
financial position. It is also called „static analysis as it is frequently
used for referring to ratio developed on one date or for one accounting
period.

PROCEDURE OF FINANCIAL STATEMENT ANALYSIS:

There are three steps involved in the analysis of financial statements.

1. Selection.

2. Classification.
3. Interpretation.
 1. SELECTION:Involves selection of information relevant to
the purpose of analysis of financial statements.

2. CLASSIFICATION:The 2nd step involved is the

methodical classification of the data and the third step includes
drawing of interpretation and conclusion.

3. INTERPRETATION:The final step involves the

interpretation of the data and it gives the final conclusion for the
respective statements in a given period when compared to past
or previous year‟s data.

METHODS OR DEVICES OR TECHNIQUES

OF FINANCIAL ANALYSIS:

The analysis and interpretation of financial statements is used to

determine the financial position and result of operations.

1. Comparative Financial statements

2. Common size financial statements

3. Trend analysis / Trend Percentages

4. Cost-Volume-Profit analysis

5. Ratio analysis.

6. Cash Flow analysis

I) COMPARATIVE FINANCIAL STATEMENTS:

The statements which have been designed in a way so as to

provide time perspective to the consideration of various elements
of financial position embodied in such statements with figures for
two or more period side by side to facilitate comparison. Both the
income statement and balance sheet can be prepared in the form of
comparative financial statements.

The comparative financial statements contain the following items.

 i. Absolute figures as given in the final accounts.

ii. Absolute figures expressed in terms of percentages.

iii. Increase or decrease in absolute figures in terms of money value.

iv. Increase or decrease in terms of percentages.

v. Comparison expressed in ratios.

vi. Percentages of totals.

Comparative Financial Statements includes the following two statements i.e.

 Comparative Balance sheet, and

 Comparative Income statements.

COMPARATIVE BALANCE SHEET:

The balance sheet prepared on a particular date reveals the

financial position of the concern on the date. To study the trends of
business over a period of time; comparative balance sheet reveals the
cause for changes in the financial position on account of various
transactions. The comparative study throws light on financial policies
adopted by management.

The comparative balance sheet consists of two columns for the

original data. A third column used to show increase or decrease in
various items. A fourth column containing the percentage of share of
each variable out of the total value.

GUIDELINES FOR INTERPRETATION OF BALANCE SHEET:

 The short term financial position can be studied by comparing the
working capital of both years.

1. To study the liquidity position, changes in liquid assets must

be ascertained and if there is any increase in liquid assets,
we must understand that there is an improvement in the
liquidity position of the concern and vice versa.
 2. A high increase in sundry debtors and bills receivable means
an increase in risk in collecting the amount of dues.

3. A high increase in closing stock may mean decrease in the demand.

4. Long term financial position of the business concern can be

analyzed by studying the changes in fixed assets, long term
liabilities and capital.

5. Fixed assets must be compared with long term loans and

capital. If the increase in fixed assets is more than the
increase in long term loans and capital, it means fixed assets
are financed from the working capital which is not good in
the long term.

COMPARATIVE INCOME STATEMENTS:

The income statement (Profit &Loss A/c) gives the results of the
operations during a definite period. It reveals the profit carried or loss
incurred by the concern. The comparative study of income statement
for more than 1 year may enable us to know the program of the
concern. First two columns give figures of various items for two years.
The third and fourth column shows increase or decrease in absolute
figures and in percentage respectively.

1. In first step, find out the changes in absolute figures i.e.,

increase or decrease should be calculated.

2. Share of each variable out of the total income or expenditure is calculated.

II) COMMON SIZE FINANCIAL STATEMENTS:

The common size statements i.e. balance sheet and income

statement are shown in analytical percentages. The figures are shown as
percentages of total assets, total liabilities and sales. The total assets are
taken as 100 and different assets are expressed as percentage of the
total. Similarly various liabilities are shown as a percentage of total
liabilities.

These statements are also known as component parentage or

100% statements because every individual item is stated as a percentage
of the total 100.The short-comings in comparative statements and trend
percentages where changes in item could not be compared with the total
have been covered up. The common size statements may be prepared in
the following way.
 i. The totals of assets or liabilities are taken as 100.

ii. The individual assets are expressed as a percentage of total

assets i.e., 100 and individual liabilities are also expressed
as a percentage of total liabilities i.e., 100.

Common Size Financial Statements also includes the following two

statements i.e.

 Common Size Balance sheet, and

 Common Size Income statements.

COMMON SIZE BALANCE SHEET:

Statement in which balance sheet items are expressed as the

ratio of each asset to total assets and the ratio of each liability is
expressed as a ratio of total liabilities is called common size balance
sheet. The common size balance sheet is a horizontal analysis. The
comparison of figures in different periods is not useful becomes total
figure may be affected by a number of factors. It is not possible to
establish standard norms for various assets. The trends of year to year
may not give proper results.

COMMON SIZE INCOME STATEMENT:

The items in income statement can be shown as percentages of

sales to show the relation of each item to sales. A significant
relationship can be established between items of income statement and
volume of sales. The increase in sales will certainly increases selling
expression and volume of sales. The increase in sales will certainly
increases selling expresses and not administrative or financial expenses.
In case the volume of sale increases to a considerable extent,
administrative and financial expenses may go up. In case the sales are
declining, the selling expenses should be reduced at once. So, a
relationship is established between sales and other in income statement
and this relationship is helpful in evaluating operational activities of the
enterprises.

III) TREND ANALYSIS:

Trend analysis is an important and useful technique of

financial analysis. It involves computation of index numbers of the
moments of the various financial items in the
financial statements for a number of periods. It enables to know the
changes in the financial position and the operational efficiency between
the period chosen.

Through trend analysis the analysis can give his opinion as

to whether favorable or unfavorable tendencies are reflected by the
accounting date.

The comparative and common size balance sheets suffer

from a major limitation i.e., absence of basic standard to indicate
whether the proportion of an item is normal or analysis values are
calculated for each item in isolation but conclusions are to be drawn by
studying the related items also.

Trend analysis can be analysis in the following ways:

i. By calculating trend ratio (or) percentage.

ii. By plotting on graph paper (or) charge.

TREND RATIO (OR) PERCENTAGE:

It involves the ascertainment of arithmetical relationship which

each item of several year to the same item of base year. Any year
maybe as the base year, it is usually the earliest year.

PROCEDURE FOR CALCULATING TREND RATIO:

The following procedure maybe adopted for calculating trend ratio.

i. Select any year as base year the selected year should be

normal year for the base year the trend value is taken as 100.
ii. Trend percentage of each item should be calculated with the
help of following formula.

CURRENT
YEAR VALUE TREND PERCENTAGE = X 100
BASE YEAR VALUE
 IV) COST-VOLUME-PROFIT ANALYSIS

Cost – Volume – Profit analysis is an important tool of

profit planning. It studies the relationship between cost, volume of
production, sales and profit. It is not strictly a technique used for
analysis of financial statements. However, it is an important tool for the
management for decision making. Since the data is provided both cost
and financial records. It tells the volume of account of variation in
output, selling price and cost, and finally, the quantity to be produced
and sold to reach the target profit level.

V) RATIO ANALYSIS:

Financial analysis depends to a very large extent on the

use of ratios though there are other equally important tools of such
analysis. Thus, a direct examination of the magnitude of two related
items is somewhat enlightening but the comparison is greatly facilitated
by expressing the relationship as a ratio.

Ratio analysis of business enterprises is done to ascertain

the capacity of the firm to meet its future financial obligation or
expectations. Present and past data are used for the purpose and
necessary extrapolations are made to provide an indication of future
performance. Alexander Walt, who criticized the bankers for their
lopsided decisions regarding the grant of credit on current ratios alone,
made the presentation of an elaborate system of ratio analysis as early
as in the year 1919.

RATIO:

Ratio is an expression of the quantitative relationship that exists

between the two numbers. The ratio is defined as “the indicated
quotient of two mathematical expressions” the ratio should be
determined between related accounting variables to be meaningful and
effective.

RATIO ANALYSIS - IMPORTANCE:

As a tool of financial management, ratios are of crucial

significance. The importance of ratio analysis lies in the fact that
presents facts on a comparative basis and enables the drawing inference
regarding the performance of a firm. Ratio analysis is relevant in
assessing the performance of a firm in respect to the following aspects.
 1. Liquidity position

2. Long-term solvency

3. Operational efficiency

4. Overall profitability

5. Inter-firm comparison, and

RATIO ANALYSIS-LIMITATIONS:

Ratio Analysis is a widely used tool of financial analysis. Yet, it

suffers from various limitations. The operational implication of this is
that while using ratios, the conclusions should not be taken on their face
value. Some of the limitations, which characterize ratio analysis, are

i. Difficulty in comparison.

ii. Impact of Inflation, and

iii. Conceptual Diversity

RATIO ANALYSIS-TYPES:

Several ratios, calculated from the accounting data, can be

grouped into various classes according to financial activity or function
to be evaluated. As stated earlier, the parties interested in financial
analysis are short-term and long-term creditors, owners and
management. Short-term creditors` main interest is in the liquidity
position or the short-term solvency of the firm. Long-term creditors`, on
the other hand, are more interested in the long-term solvency and
profitability of the firm. Similarly, owners concentrate on the firm‟s
profitability and financial condition. Management is interested in
evaluating every aspect of the firm‟s performance. They have to protect
the interests of all parties and see that the firm grows profitably. In view
of the requirements of the various users of ratios, we may classify them
into the following four important categories:

 LIQUIDITY RATIOS

 LEVERAGE RATIOS
  ACTIVITY RATIOS

 PROFITABILITY RATIOS

A) LIQUIDITY RATIOS:

It is extremely essential for a firm to be able to meet its

obligations as they become due. Liquidity ratios measure the firm‟s
ability to meet current obligations.

In fact, analysis of liquidity needs the preparation of cash

budgets and cash and Fund Flow statements; but liquidity ratios, by
establishing a relationship between cash and other current assets to
current obligations provided a quick measure of liquidity. A firm
should ensure that it does not suffer from lack of liquidity, and also that
it does not have excess liquidity. The failure of a company to meet its
obligations due to lack of sufficient liquidity, will result in a poor
creditworthiness, loss of creditors` confidence, or even in legal tangles
resulting in the closure of the company. A very high degree of liquidity
is also bad; idle assets earn nothing. The firm‟s funds will be
unnecessarily tied up in current assets. Therefore, it is necessary to strike
a proper balance between high liquidity and lack of liquidity. The most
common ratios, which indicate the extent of liquidity or lack of it, are:

1. CURRENT RATIO:

The current ratio is calculated by dividing current assets by current

liabilities.

CURRENT ASSETS
CURRENT
RATIO =

CURRENT LIABILITIES
 Current assets include cash and those assets, which can be
converted into cash within a year, such as Marketable Securities,
Debtors and Inventories. Prepaid expenses are also including in current
assets as they represent the payments that will not be made by the firm
in future. Current Liabilities include Creditors, Bill payable, Accrued
expenses, Short-term bank loan, and Income Tax Liability and Long-
term debt maturing in the current year.

The current ratio is a measure of the firms` short-term solvency.

The higher the current ratio, the larger is the amount of rupees available
per Rupee of current liability, the more is the firms` ability to meet
current obligations and the greater is the safety of funds of short- term
creditors.
2. QUICK RATIO:

The Quick ratio is calculated by dividing quick assets by quick liabilities.

QUICK RATIO = QUICK ASSETS

QUICK LIABILITIES

Quick assets or Liquid assets mean those assets which are

immediately convertible into cash without much loss. All current assets
except prepaid expenses and inventories are categorized in liquid assets.
Quick liabilities means those liabilities, which are payable within a
short period. Normally, Bank overdraft and Cash credit facility, if they
become permanent mode of financing are in quick liabilities.

As this ratio concentrates on cash, marketable securities and

receivables in relation to current obligation, it provides a more
penetrating measure of liquidity than current ratio.

B) LEVERAGE RATIOS:

The short-term creditors like bankers and suppliers of raw

material are more concerned with the firms` current debt-paying ability.
On the other hand, long-term creditors like debenture holders, financial
institutions etc., are more concerned with the firms` long- term financial
strength. In fact, a firm should have strong short-as well as long-term
financial position. To judge the long-term financial position of the firm,
financial leverage, or Capital structure, ratios are calculated. These
ratios indicate mix of funds provided by owners and lenders. As a
general rule, there should be an approximate mix of debt and owner‟s
equity in financing the firms` assets.
The manner in which assets are financed has a number of implications.
First, between debt and equity, debt is more risky from the firms` point
of view. The firm has a legal obligation to pay interest on debt holders,
irrespective of the profits made or losses incurred by the firm. If the
firm fails to debt holders in time, they can take legal action against it to
get payment and in extreme cases, can force the firm into liquidation.

Secondly, use of debt is advantageous for shareholders in two ways:

a. They can retain control of the firm with a limited stake and
 b. Their earnings will be magnified, when the firm earns a rate of
return on the total capital employed higher than the interest rate
on the borrowing funds. The process of magnifying the
shareholders return through the use of debt is called “financial
leverage” or “financial gearing” or “trading on equity”.

Leverage ratios may be calculated from the balance sheet to determine

the proportion of debt in total financing. Many variations of these ratios
exist; but all these ratios indicate the same thing-the extent to which the
firm has relied on debt in financing assets. Leverage ratios are also
computed from the profit and loss items by determining the extent to
which operating profits are sufficient to cover the fixed charges.

1. DEBT – EQUITY RATIO:

The relationship describing the lender contribution for each rupee

of the owner‟s contribution is called DEBT-EQUITY RATIO. Debt
Equity ratio is directly computed by the following formula.

DEBT- EQUITY RATIO = DEBT

EQUITY

2. PROPRIETARY RATIO:

This ratio states relationship between share capital and total

assets. Proprietor‟s equity represents equity share capital, preference
share capital and reserves and surplus. The latter ratio is also called
capital employed to total assets.

EQUITY SHARE
PROPRIETARY
RATIO =
CAPITAL TOTAL
T LE ASSETS

3. INTEREST COVERAGE RATIO:

This ratio indicates the extent to which earnings can decline

without resultant financial hardship to the firm because of its inability
to meet annual interest cost. For example, coverage of 5 times means
that a fall in earnings unto (1/5th) level would be
 tolerable, as earnings to service interest on debt capital would be
sufficiently available. This ratio is measured as follows:

EBIT

INTEREST COVERAGE
RATIO = INTEREST

CHARGES
C) ACTIVITY
RATIOS:

Funds creditors and owners are invested in various assets to

generate sales and profits. The better the management of assets, the
larger the amount of sales. Activity ratios are employed to evaluate the
efficiency with which the firm managers and utilizes its assets. These
ratios are also called Turnover Ratios because they indicate the speed
with which assets are being converted or turned over into sales. Activity
ratios, thus, involve a relationship between sales and assets. A proper
balance between sales and assets generally reflects that assets are
managed well. Several activity ratios can be calculated to judge the
effectiveness of asset utilization.

1. DEBTORS TURNOVER RATIO:

A firm sells goods for cash and credit. Credit is used marketing
tool by a number of companies. When the firm extends credits to its
customers, debtors (accounts receivables) are created in the firms`
accounts. The debtors are expected to be converted into cash over a
short period and, therefore, are included in current assets. The liquidity
position of the firm depends on the quality of debtors to a greater
extent. Debtors turnover ratio indicates the velocity of debt collection
of a firm. In simple wards it indicates the number of times average
debtors are turned over during a year.
 CREDIT SALES
DEBTORS TURNOVER RATIO =
AVERAGE TRADE DEBTORS
D) PROFITABILITY RATIOS:

A company should earn profits to Survive and Grow over a

long period of time. Profits are essential, but it would be wrong to
assume that every action initiated by
management of a company should be aimed at maximizing profits,
irrespective of social consequences.

Profit is the difference between revenues and expenses over a

period of time (usually a year). Profit is the ultimate “Output” of a
company, and it will have no future if it fails to make sufficient
profits.Therefore, the financial manager should continuously evaluate to
the efficiency of the company in term of profits. The profitability ratios
are calculated to measure the operating efficiency of the company.
Besides management of the company, creditors and owners are also
interested in the profitability of the firm. Creditors want to get interest
and repayment of principle regularly. Owners want to get a required
rate of return on their investment. This is possible only when the
company earns enough profits.

Generally two major types of profitability ratios are calculated.

1. PROFITABILITY IN RELATION TO SALES

2. PROFITABILITY IN RELATION TO INVESTMENT

PROFITABILITY RATIOS IN RELATION TO SALES

1. GROSS PROFIT MARGIN RATIO:

Gross profit margin reflects the efficiency with which the

management produces each unit of product. This ratio indicates
the average spread between the cost of goods sold and the sales
revenue. This shows profits relative to sales after the deduction
of production costs and indicates the relation between
Production costs and selling price. A high gross profit margin
relative to the industry average implies that the firm is able to
produce at relatively lower cost.
 A high gross profit margin ratio is a sign of good management.
A gross margin ratio may increase due to any of the following factors.

i. Higher sales prices, cost of goods sold remaining constant,

ii. Lower cost of goods sold, sales prices remaining constant,

iii. A combination of variations in sales prices and costs, the margin widening,
and
 iv. Increases in the proportionate volume of higher margin items.

The analysis of these factors will reveal to the management that

how a depressed gross profit margin can be improved.

A low gross profit margin may reflect higher cost of goods

sold due to the firms` inability to purchase raw materials at favorable
terms, inefficient utilization of plant and machinery, resulting in higher
cost of production. The ratio will also be low due to fall in prices in the
market, or market reduction in selling price by the firm in an attempt to
obtain large sales volume, the cost of goods sold remaining unchanged.
The financial manager must be able to detect the causes of a falling
gross margin and initiate action to improve the situation.
 SALES-COST
O
F

G
O
O
D
S

S
O
L
D

(
O
r
)
GROSS PROFIT
GROSS PROFIT MARGIN RATIO =
SALES

2. NET PROFIT MARGIN RATIO:

Net profit is obtained when operation expenses, interest and
taxes are subtracted from the gross profit.

If the non-operating income figure is substantial, it may be

excluded from PAT to see profitability arising directly from sales. Net
profit margin ratio establishes a relationship between net profit and
sales and indicated management‟s efficiency in manufacturing,
administering and selling the products. This ratio is the overall measure
of the firms` ability to turn each rupee sales into net profit. If the net
margin is inadequate, the firm will fail to achieve satisfactory return on
shareholder`s funds.

This ratio also indicates the firms` capacity to withstand in adverse

economic conditions. A firm with a high net margin ratio would be in
an advantageous position to survive in the case of falling selling prices,
rising costs of production or declining demand for the product. It would
really be difficult for a low net margin firm to withstand these
adversities. Similarly, a firm higher net profit margin can make better
use of favorable condition, such as
rising selling prices; fall in costs of production or increasing demand
for the product. Such a firm will be able to accelerate its profits at a
faster rate than a firm with a low net profit margin will.

An analyst will be able to interpret the firm‟s profitability more

meaningfully if he/she evaluates both the ratios-gross margin and net
margin-jointly. To illustrate, if the gross profit margin has increased
over years, but the net profit margin has either remained constant or
declined, or has not increased as fast as the gross margin, this implies
that the operating expenses relative to sales have been increasing. The
increasing expenses should be identified and controlled. Gross profit
margin may decline due to fall in sales price or increase in the cost of
production.

PROFIT AFTER TAX

NET PROFIT MARGIN
RATIO =

SALES
3. RETURN ON INVESTMENT:

The term investment refers to Total Assets. The funds employed

in Net assets are known as Capital Employed. Net assets equal net fixed
assets plus current assets minus Current liabilities excluding Bank
loans. Alternatively, Capital employed in equal to Net worth plus total
debt.

The conventional approach of calculating return on investment

(ROI) is to divide PAT by Investment. Investment represents pool of
funds supplied by shareholders and lenders, while PAT represents
residual income of shareholders; therefore, it is conceptually unsound
to use PAT in the calculation of ROI. Also, as discussed earlier, PAT is
affected by capital structure. It is, therefore more appropriate to use one
of the following measures of ROI for comparing the operating
efficiency of firms.

EBIT (1-T)
ROI (or) ROTA =
T
OT
AL
ASS
ETS
EBI
T
(1-
T)
ROI (or) RONA =
NET ASSETS
 Where ROTA and RONA respectively Return on Total assets
and Return on Net assets.RONA is equivalent of Return on Capital
Employed.

VI) CASH FLOW ANALYSIS:

The statement of changes in financial position has an analytical

value as well as an important planning tool. It gives a clear picture of
the causes of changes in the company‟s working capital position or
cash position. It reveals the financing and investment policies followed
by the company in the past. The statement reveals the non-current
assets acquired by the company and manner in which they have been
financed from internal and external sources.

A projected statement of changes in financial position is an

important planning tool. The estimates of working capital for a long-
term period, say, for five to ten years help the management to plan the
repayment of long-term debt and interest, acquisition of fixed assets
and payment of cash dividends.

A projected statement of changes in financial position is also

useful in obtaining loans from banks and other financial institutions.

Now-a-days lenders invariably ask for such projected

statements. These statements indicate them the liquidity position of the
firm and its ability to pay interest regularly and return the principal
sum.

The statement prepared to analyze the cash flows is an important

tool of the short term financial planning. To make payments in the
immediate future the firm needs cash; therefore, the firm is interested in
estimating its cash balances for several months or quarters.
 There are 4 steps involved in preparation of funds flow statement:

a. Ascertain the funds from operations.

b. Preparation of statement of changes.

c. Computation of any missing figures as to profit or loss

on Sale of fixed assets, purchase or sale of fixed assets
and the amount of depreciation on fixed assets etc.

d. Finally preparation of funds flow statement.

LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS:

The following are the impartment limitations of financial analysis.

1. It is only a study of internal reports.

2. Financial analysis is based upon only monetary information and

non-monetary factors are ignored.

3. It does not consider changes in price levels.

4. As the financial statements are prepared on the basis of a going

concern it does not give exact position thus accounting concepts
and contentions cause a serious limitation to financial analysis.

Changes in accounting procedure by a firm may often make financial analysis

 CHAPTER 5
DATA ANALYSIS
&
INTERPRETATION
 Financial performance indicators like

1. Liquidity ratio
2. Leverage ratio
3. Activity ratio and
4. Profitability ratio, efficiency parameters are calculated and
analyzed through application of “Ratio Analysis” tool.

In this Liquidity ratio also calculated the “Current ratio and

Quick ratio”, in the Leverage ratio also again calculated the “Debt
Equity ratio, Proprietary ratio and Interest Coverage ratio”, in the
Activity ratio further calculated the “Debtor Turnover ratio, Average
Collection Period, Inventory Turnover ratio and Total Assets Turnover
ratio, and in the Profitability ratio further calculated the “Gross Profit
ratio, Net Profit ratio and Return on Shareholders‟ Investment ratio”.

The comparison had also been done for the five years for each
and every ratio and represented in histograms (Bar graphs) and same is
interpreted and there after based on the analysis and through observing
various strengths and weaknesses the finding and few suggestions are
submitted for JVH accordingly.
 COMPUTATION OF RATIOS FOR THE YEAR 2017-18:

I. LIQUIDITY RATIOS:
Liquidity means ability of a firm to meet its current
liabilities. In the year 2017- 18, the performance of the
liquidity ratios are below:

Current Ratio:
This ratio is commonly used to perform the short-term
financial analysis. This ratio matches the current assets of the firm
to its current liabilities.

Current Assets
Current Ratio = ---------------------------
Current Liabilities

Current Assets: Rs in Crs

Inventory 9637.39
Trade receivables 24428.98
Cash & bank 10085.99
Other Assets 122.08
Loans & advances 2264.59
Total Current Assets 46539.03
(Sources: Complied from annual reports of JVH )

Current
Liabilitie Rs in Crs
s:
Short term borrowings 0.00
Trade payables 8702.05
Other current liabilities 8779.73

Short term provisions 3454.76

Total current liabilities 20936.54

(Sources: Complied from annual reports of JVH .)

46539.03
Current ratio = -----------------------
20936.54

Current ratio = 2.2:1

 Quick Ratio:
This ratio is also known as acid or liquid ratio. It is a more
severe test of liquidity of a company than the current ratio.

Current Assets-Inventory
Quick Ratio = -----------------------------------
Current Liabilities

Current Assets-Inventory = 46539.03 – 9637.39

= 38435.88

38435.88
Quick Ratio = ------------------------
22207.48

Quick Ratio= 1.7:1

II. LEVERAGE RATIOS:

Leverage ratio is also called as Solvency ratio.
In the year 2015-16 the performance of the leverage
ratios are below.

Debt Equity Ratio:

This ratio attempts to measure the relationship
between long-term debts and Shareholder‟s fund.
Rs in Crs
Long term debt
Long term borrowings 126.29
Other long term borrowings 4587.89
Long term provisions 7986.03
Total 12700.21
Shareholders’ equity
Share Holders Funds 489.52
Reserves & Surplus 32563.83
Total 33053.35
(Sources: Complied from annual reports of JVH .)
 Long term debt
Debt Equity Ratio = ------------------------------
-
Shareholders equity
 12700.21
= ----------------
---------
33053.35

Debt Equity Ratio = 0.38:1

Proprietary Ratio: It measures the relationship

between shareholders fund and the total assets.

Share holders’ funds

Proprietary ratio = ----------------------------------------
Total Assets

Rs in Crs
Share holders’ funds
Share capital 489.52
Reserves & Surplus 32563.83
Total 33053.35
Total Assets
Net Fixed Assets 42788.55
Non current investments 663.4
Deferred tax assets 3134.83
Long term loans and advances 900.22
Other non current assets 11174.07
Current Assets 46539.03
Total 66690.1
(Sources: Complied from annual
reports of JVH )
33053.35
= ---------------------------------
66690.1

Proprietary ratio = 0.5:1

III. ACTIVITY RATIOS:
Turnover ratios are also called as Activity ratios.
The performance of the turnover ratios for the year 2015-16
are in the below:
 Debtor Turnover Ratio:
This ratio indicates the relation between the net credit
sales and trade debtors. It is computed as follows:

Sales
Debtors Turn Over Ratio = ------------------------------------
Average debtors

26586.51
= ------------------------
27785.31

Debtors Turn Over Ratio = 0.96:1

Average Collection Period:

The average collection period formula is the number of days in a period
divided by the receivables turnover ratio.

The numerator of the average collection period formula shown

at the top of the page is 365 days. For many situations, an annual
review of the average collection period is considered. However, if the
receivables turnover is evaluated for a different time period, then the
numerator should reflect this same time period. It can be calculated

No of Working Days
Average Collection Period = ---------------------------------------
Debtor’s turnover ratio

with the following formula:

365
= ----
-
-
-
-
-
-
-
-
-
-
-
-
 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-

0
.
9
6

= 381

Average collection period is 381 days

Inventory Turnover Ratio:

 Sales
Inventory Turnover Ratio = -----------------------------
Average inventory

This ratio is calculated by dividing the cost of goods sold by average inventory.

26586.51
= -------------------------
12604.16

Inventory Turnover Ratio = 2.1: 1

Total Assets Turnover Ratio:

This ratio shows the relationship between cost of sales
(or sales) and the total capital employed.

Sales
Total asset Turnover Ratio =
Total assets

26586.51
= -------------------------------
66690.1
Total asset Turnover Ratio =0.39:1

IV. PROFITABILITY RATIOS:

This ratio is calculated to measure the efficiency of a
business. The performance of the profitability ratios for the year
2017-18are below:

Net Profit Ratio:

This ratio is the overall measure of the firms` ability to turn
each rupee sales into net profit. If the net margin is inadequate, the
firm will fail to achieve satisfactory return on shareholder`s funds.
 Net profit
Net profit ratio = -------------------------- X 100
Net sales

-913.42
= ------
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

1
0
0

2
6
5
8
6
.
5
1
Net profit ratio = -3.44:1

 Return On Shareholders’ Investment:

 The term investment refers to Total Assets. The funds employed
in Net assets are known as Capital Employed. Return on shareholders‟
investment is calculated as follows:

Net Profit (After Interest & Tax)

RO I= ---------------------------------------------------- x 100
Shareholders’ Funds

-913.42
= ------
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
X

1
0
0

3
3
0
5
3
.
 3
5

ROI = -2.76
 COMPUTATION OF RATIOS FOR THE YEAR 2016-17:

I .LIQUIDITY RATIOS:
Liquidity means ability of a firm to meet its current
liabilities. In the year 2016- 17, the performance of the
liquidity ratios are below:

Current Ratio:
This ratio is commonly used to perform the short-term
financial analysis. This ratio matches the current assets of the firm
to its current liabilities.

Current Assets
Current Ratio = ---------------------------
Current Liabilities

Current Assets:

Inventory 10101.66
Trade receivables 26223.5
Cash & bank 9812.7
Other Assets 175.03
Loans & advances 2224.65
Total Current Assets 48537.54
(Sources: Complied from annual reports of JVH )

Current
Liabilitie Rs in Crs
s:
Short term borrowings 0.00
Trade payables 8798.94
Other current liabilities 9123.31

Short term provisions 4285.23

Total current liabilities 22207.48

(Sources: Complied from annual reports of JVH .)

48537.54
Current ratio = -----------------------
 22207.48

Current ratio = 2.1:1

 Quick Ratio:
This ratio is also known as acid or liquid ratio. It is a more
severe test of liquidity of a company than the current ratio.

Current Assets-Inventory
Quick Ratio = -----------------------------------
Current Liabilities

Current Assets-Inventory = 48537.54 –

10101.66

= 38435.84

38435.84
Quick Ratio = ------------------------
22207.48

Quick Ratio= 1.7:1

III. LEVERAGE RATIOS:

Leverage ratio is also called as Solvency ratio.
In the year 2017-18 the performance of the leverage
ratios are below.

 Debt Equity Ratio:

This ratio attempts to measure the relationship
between long-term debts and Shareholder‟s fund.

Rs in Crs
Long term debt
Long term borrowings 61
Other long term borrowings 5358.84
Long term provisions 6755.21
Total 12175.05
Shareholders’ equity
Share Holders Funds 489.52
Reserves & Surplus 33595.08
 Total 34084.6
(Sources: Complied from annual reports of JVH .)

Long term debt

Debt Equity Ratio = ------------------------------
-
Shareholders equity
 12175.05
= -------------------------

34084.6
Debt Equity Ratio = 0.36:1

 Proprietary Ratio: It measures the relationship

between shareholders fund and the total assets.

Share holders’ funds

Proprietary ratio = ----------------------------------------
Total Assets

Rs in Crs
Share holders’ funds
Share capital 489.52
Reserves & Surplus 33595.08
Total 34084.6
Total Assets
Net Fixed Assets 4658.32
Non current investments 417.67
Deferred tax assets 2220.73
Long term loans and advances 1219.05
Other non current assets 11413.82
Current Assets 48537.54
Total 68467.13
(Sources: Complied from annual
reports of JVH ) 34084.6
= ------
-
-
-
-
-
-
-
 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

6
8
4
6
7
.
1
3
Proprietary ratio = 0.50:1

III. ACTIVITY RATIOS:

Turnover ratios are also called as Activity ratios.
The performance of the turnover ratios for the year 2016-18
are in the below:
  Debtor Turnover Ratio:
This ratio indicates the relation between the net credit
sales and trade debtors. It is computed as follows:

Sales
Debtors Turn Over Ratio = ------------------------------------
Average debtors

30947.04
= ------------------------
28653.21

Debtors Turn Over Ratio = 1.08:1

 Average Collection Period:

The average collection period formula is the number of days in a period
divided by the receivables turnover ratio.

The numerator of the average collection period formula shown

at the top of the page is 365 days. For many situations, an annual
review of the average collection period is considered. However, if the
receivables turnover is evaluated for a different time period, then the
numerator should reflect this same time period. It can be calculated
with the following formula:

No of Working Days Average

Collection Period = ---------------------------------------
Debtor’s turnover ratio

365
= ----
-
-
-
-
-
-
-
-
 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

1
.
0
8
=

Average collection period is 338 days

 Inventory Turnover Ratio:

Sales
Inventory Turnover Ratio = -----------------------------
Average inventory

This ratio is calculated by dividing the cost of goods sold by average inventory.
 30947.04
= -------------------------
10780.69

Inventory Turnover Ratio = 2.9: 1

 Total Assets Turnover Ratio:

This ratio shows the relationship between cost of sales
(or sales) and the total capital employed.

Sales
Total asset Turnover Ratio =
Totalassets

` 30947.04
= ----------
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

6
8
4
6
7
.
1
3
 Total asset Turnover Ratio =0.45:1

I> PROFITABILITY RATIOS:

This ratio is calculated to measure the efficiency of a
business. The performance of the profitability ratios for the year
2015-16 are below:

 Net Profit Ratio:

This ratio is the overall measure of the firms` ability to turn
each rupee sales into net profit. If the net margin is inadequate, the
firm will fail to achieve satisfactory return on shareholder`s funds.

Net profit
Net profit ratio = -------------------------- X 100
Net sales

1419.29
= ------
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

1
0
0

3
0
 9
4
7
.
0
4
Net profit ratio = 4.6:1

 Return On Shareholders’ Investment:

The term investment refers to Total Assets. The funds employed
in Net assets are known as Capital Employed. Return on shareholders‟
investment is calculated as follows:

Net Profit (After Interest & Tax)

RO I= ---------------------------------------------------- x 100
Shareholders’ Funds
 1419.29
= ------------------------- X 100
34084.6

ROI = 4.2
 COMPUTATION OF RATIOS FOR THE YEAR 2015-16:

I .LIQUIDITY RATIOS:
Liquidity means ability of a firm to meet its current
liabilities. In the year 2015- 16, the performance of the
liquidity ratios are below:

 Current Ratio:
This ratio is commonly used to perform the short-term
financial analysis. This ratio matches the current assets of the firm
to its current liabilities.

Current Assets
Current Ratio = ---------------------------
Current Liabilities

Current Assets:

Inventory 9797.55
Trade receivables 28071.92
Cash & bank 11872.93
Other Assets 252.52
Loans & advances 2023.86
Total Current Assets 52018.78
(Sources: Complied from annual reports of JVH )

Current
Liabilitie Rs in Crs
s:
Short term borrowings 2550
Trade payables 8719.02
Other current liabilities 11444.14

Short term provisions 2829.59

Total current liabilities 25542.75

(Sources: Complied from annual reports of JVH .)

52018.78
Current ratio = -----------------------
 25542.75

Current ratio = 2.0:1

  Quick Ratio:
This ratio is also known as acid or liquid ratio. It is a more
severe test of liquidity of a company than the current ratio.

Current Assets-Inventory
Quick Ratio = -----------------------------------
Current Liabilities

Current Assets-Inventory = 52018.78-9797.55

= 42221.25

42221.25
Quick Ratio = ------------------------
25542.75
Quick Ratio= 1.7:1

IV. LEVERAGE RATIOS:

Leverage ratio is also called as Solvency ratio.
In the year 2016-17 the performance of the leverage
ratios are below.

 Debt Equity Ratio:

This ratio attempts to measure the relationship
between long-term debts and Shareholder‟s fund.
Rs in Crs
Long term debt
Long term borrowings 104.77
Other long term borrowings 6600.17
Long term provisions 7496.43
Total 14201.37
Shareholders’ equity
Share Holders Funds 489.52
Reserves & Surplus 32557.53
Total 33047.05
(Sources: Complied from annual reports of JVH .)

14201.37
= -------------------------
33047.05
 Debt Equity Ratio = 0.43:1

 Proprietary Ratio: It measures the relationship

between shareholders fund and the total assets.

Share holders’ funds

Proprietary ratio = ----------------------------------------
Total Assets

Rs in Crs
Share holders’ funds
Share capital 489.52
Reserves & Surplus 32557.53
Total 33047.05
Total Assets
Net Fixed Assets 5335.06
Non current investments 420.17
Deferred tax assets 1968.95
Long term loans and advances 1167.14
Other non current assets 11881.07
Current Assets 52018.78
Total 72791.17
(Sources: Complied from annual
reports of JVH ) 33047.05
= ------
-
-
-
-
-
-
-
-
-
-
-
-
 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-

7
2
7
9
1
.
1
7
Proprietary ratio = 0.45:1

III. ACTIVITY RATIOS:

Turnover ratios are also called as Activity ratios.
The performance of the turnover ratios for the year 2015-16
are in the below:

 Debtor Turnover Ratio:

This ratio indicates the relation between the net credit
sales and trade debtors. It is computed as follows:

Sales
Debtors Turn Over Ratio = ------------------------------------
Average debtors
 40337.92
= ------------------------
2714.71

Debtors Turn Over Ratio = 1.49:1

 Average Collection Period:

The average collection period formula is the number of days in a period
divided by the receivables turnover ratio.

The numerator of the average collection period formula shown

at the top of the page is 365 days. For many situations, an annual
review of the average collection period is considered. However, if the
receivables turnover is evaluated for a different time period, then the
numerator should reflect this same time period. It can be calculated

No of Working Days
Average Collection Period = ---------------------------------------
Debtor’s turnover ratio
with the following formula:
365
= ----
-
-
-
-
-
-
-
-
-
-

4
9

Average collection period is 246 days

Inventory Turnover Ratio:

104
 Sales
Inventory Turnover Ratio = -----------------------------
Average inventory

This ratio is calculated by dividing the cost of goods sold by average inventory.

40337.92
= -------------------------
9949.60

Inventory Turnover Ratio = 4.1: 1

Total Assets Turnover Ratio:

This ratio shows the relationship between cost of sales
(or sales) and the total capital employed.

Sales
----------------------------------------
Total Assets

FINACIAL ANALYSIS
ANALYSIS OF JVH MARINEAND CRABS -
Share
Total Fixed Capital Long term
Years Total assets Net Profit holders’
sales assets Employed funds
Funds
2010-2011 13205.64 14810.64 10890.33 1404.23 6607.67 2789.76 274.04
2011-2012 18270.69 16667.95 12166.13 2446.19 10392.72 2012.09 274.07
2012-2013 20174.94 19697.50 14025.19 2655.43 11986.24 2147.34 274.18
2013-2014 20279.80 21970.29 15521.42 2144.47 14186.57 2389.35 274.24
2014-2015 22936.17 25369.51 18384.46 2014.73 16827.08 2956.53 274.40

105
 FINDINGS
 The amount of total investment in assets as decreased significantly from Rs. 25
cr.
 The amount of sales has increased from 21 Cr to 27Cr (2018-2019) this
increased sales helped the organization to improve its business turn over in
different sectors
 Payback period for the project will be 2.12 years it indicates the project earns
good yield in future also.
 Average rate of return for the JVH COMPANY - - is 45 %.
 NPV and IRR show a good path for the organization to develop In future
markets and also the investments for the investors.
 The capital budgeting decision for JVH COMPANY - - is governed by a
manual issued by the planning Commission. It contains the following important
provisions in the regard: (1) It suggest the use of various project evaluation
techniques, such as return on investment (ROD, payback period, discounted
cash flow (DCF) Evaluation and Review Technique (PERT), Critical path

106
 method (CPM), and strengths, weaknesses, opportunities and Threats (SWOT)
Analysis.
 The total assets of JVH COMPANY - - recorded consistent fluctuations from
2.85 (2014-2015), 2.14 (2013-2014). This decline is an account of lower
growth rates sales in those years.
 The fixed assets of JVH COMPANY - - showing a fluctuating trend and
increased These fluctuations any be due to fixed assets investment.

SUGGESTIONS

As large sum of money is involved which influences the profitability of the

firm making capital budgeting an important task.

Long term investment once made cannot be reversed without significance

loss of invested capital. The investment becomes sunk and mistakes, rather than

being readily rectified, must often be born until the firm can be withdrawn

through depreciation charges or liquidation. It influences the whole conduct of

the business for the years to come.

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 Investment decision are the base on which the profit will be earned and

probably measured through the return on the capital. A proper mix of capital

investment is quite important to ensure adequate rate of return on investment,

calling for the need of capital budgeting.

The implication of long term investment decisions are more extensive than

those of short run decisions because of time factor involved, capital budgeting

decisions are subject to the higher degree of risk and uncertainty than short run

decision.

CONCLUSIONS

 The budgeting exercise in JVH COMPANY also covers the long term capital
budgets, including annual planning and provides long term plan for application
of internal resources and debt servicing translated in to the corporate plan.
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 The scope of capital budgeting also includes expenditure on marine betterment,
and renovation, balancing equipment, capital additions and commissioning
expenses on trial runs generating units.
 To establish a close link between physical progress and monitory outlay and to
provide the basis for plan allocation and budgetary support by the government.
 The manual recommends the computation of NPV at a cost of capital / discount
rate specified from time to time.
 A single discount rate should not be used for all the capacity budgeting
projects.
 The analysis of relevant facts and quantifications of anticipated results and
benefits, risk factors if any, must be clearly brought out.
 Inducting at least three non -official directors the mechanism of the Search
Committee should restructure the Boards of these PSUs.
 Feasibility report of the project is prepared on the cost estimates and the cost
of generation.
 Scope of capital budgeting in JVH COMPANY - - are
 * Approved and ongoing schemes
 New approved schemes
 Unapproved schemes
 Capital budgets for marine betterment’s
 Survey and investigation
 Research and development budget.

 Overall the funds flow management in JVH products Ltd. Is up to the mark where by
adequate supplies of material and stores, minimization of stocks and avoided costly
interruption in operations.

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 It has kept down the investments in inventories, inventory carry cost and obsolescence
losses to the measurement of requirement on the basis of record experience.
 It also enables the management to make cost and consumptions between operations
and periods.
 The company’s inventory management is at satisfactory level.
 The company’s debtor’s turnover ratio indicates the efficient management.
 The debt collection period is also satisfactory.
 The credit payment period is also satisfactory.

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 BIBLIOGRAPHY

Name of the
Name of Edition/
Sl.No. Title of the Book Publisher &
the Author Volume No.
Year
Vikas
C,N Indian Financial publishing
1 3rd edition
KUMAR System house pvt.ltd.,
2017
Fundamentals of
2 ASIS RAJ 1st edition PHI, 2018
financial management

Websites:
 www.en.wikipedia.org
 www.smconline.com

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