CERTIFICATE FROM THE FACULTY GUIDE

This is to certify that the project work entitled “Income

Statement and Trend of Earning of U.V Overseas “is a bonafide
work carried out by NAGENDRA PAL SINGH, a candidate of the
HINDUSTAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT,
KEETHAM AGRA under my guidance and direction.

Signature of the guide

Faculty Name: - Dr. Mukesh Jethwani

 ACKNOWLEDGEMENT
On the very outset of this project, I would like to extend my sincere and
heartfelt obligation towards all the personage who have helped me in
this endeavor. Without their active guidance, help, cooperation and
encouragement. I would have to made headway in the project.

I am ineffably indebted to Dr. Ravi Kant Pathak for conscientious

guidance and encouragement to accomplish this assignment.

I am extremely thankful and pay my gratitude to my faculty guide

Dr. Mukesh Jethwanifor his valuable guidance and support on
completion of this project in its present.

I extended my gratitude to HINDUSTAN INSTITUTE OF TECHNOLOGY

AND MANAGEMENT KEETHAM, AGRA for giving me this opportunity.

I also acknowledge with a deep sense of reverence, my gratitude

towards my parents and member of my family, who has always support
me morally as well as economically.

At last but not least gratitude goes to all my friends who directly or
indirectly helped me to complete this project report.

Any omission in this brief acknowledgement does not mean lack of

gratitude

Date: 9-01-2016 Signature

Name: Nagendra Pal Singh

Roll no: 1400370018

 DECLARATION

I NAGENDRA PAL SINGH student of MBA from HINDUSTAN INSTITUTE

OF TECHNOLOGY AND MANAGEMENT, KEETHAM AGRA hereby
declare that the project entitled “Income Statement and Trend of
Earning of U.V Overseas “Submitted in partial fulfilment of the
requirements for award of the degree of MBA and the information
facts and figure produced in the report is based on my own experience.
I further declare that it is an authentic work and has not been
submitted to any other University/Institute for award of any
degree/diploma. And the fact furnish in the project report are based on
extensive research and findings.

Date: 9-10-2016 Signature:

Name: Nagendra Pal Singh

Roll no: 1400370018

 PREFACE
Is one has to he has to keep pace with changing times. This saying holds
good in every field of life be general or professional. Being a student of
professional course I and we have to keep a constant vigil on rapidly
changing environment.

Indian industry is no more a protected one? Expect some strategically

important industries, every field is thrown to global competition
liberalization and globalization combined with privatization of existing
public sector companies is the new mantra of Indian economic policies.

To bridge the gap between theory & practice and to cultivate proper
and temperament generate much needs morale i.e. to help the
students to identify their strong and weak points in the following and
appreciating various organization activities.

So, in this new era of tough competition only fittest will survive.
FINANCE is the life blood of any organization it is the main survival
Planck of any industry. It is the heart of any organization. Industry
spends a lot of time to manage and control the cost. With the purpose
of getting myself well dressed with this kind of atmosphere of
prevailing industry. I take 45 days plant training at U.V. OVERSEAS
Sikandara, Agra.
 TABLE OF CONTENTS Pages

Chapter 1: Introduction
 Brief Introduction of the company

Chapter 2: Meaning and Concepts of Earnings and Profit

 Meaning and Earning and Profit
 Fixed Capital
 Working Capital
Chapter 3: Research Methodology
 Objectives of the study
 Sources of Information
 Limitations of the study
Chapter 4: Income Statement and Rate of Earnings
 Income Statements
 Different items of Income and Expenditures
 Rate of Earnings
i. Gross Profit Ratio
ii. Net Profit Ratio
iii. Operating Ratio
Chapter 5: Flow of assets Structure
 Block Assets and Current Assets
 Ratio of Block Assets to Current Assets
 Current Assets and Current Ratio
 Liquid assets and Liquid Ratio
 Solvency Ratio

Chapter 6:Trend of Earning

 Trend of Net Profit
 Trend of Earning on total capital employed and
worling capital
 Fund Flow Statement
Chapter 7: Finding

Chapter 8:Conclusion

Bibliography
CHAPTER 1
INTRODUCTION

We deal in a huge range of in house designs which keep

changing according to market dynamics.

Specializing in genuine leather high fashion products we have

infrastructure & resources that can cater to all kinds of men’s
and ladies footwear.

Manufacturing Facilities

 Company’s unit in Agra spreads over 50,000 sq. ft. and to

its optimum our unit can produce 40,000 pairs a month
excluding the sub-contractual capacities. Company
maximize output by following the management policy of
efficiency i.e. right man for the right job and process
segregation.
  Company’s team is well experienced and resourceful with
regard to production and raw material sourcing. Company
are placed in the heart of one of the biggest footwear
manufacturing hubs of the world, Company exceedingly
competitive in developments and sourcing at a global
level.

Quality
SA – 8000
ISO – 14001
ISO – 9001

 Each pair is examined carefully by skilled professionals at

every stage. Company have a quality team reporting
directly to our Company Head.
 Company ISO 9001 and 14001 certified where fulfill
obligations towards the environment and each process
either administrative or operative is quality certified,
predefined and according to protocol.
  Vertically integrated ERP systems help in managing all
aspects of operations in the utmost efficient manner.

EXPERIENCE
 The organization is spearheaded by Mr. Dheeraj
Guwalani. Reputed as a trend setter, he has an
experience of over 22 years in dealing with the domestic
and export markets.
 Mr. Utsav Dang, a graduate from the London School of
Economics, University Of London has joined in, giving
an innovative and contemporary perspective to the
company.

CLIENTELE

 Working for brands like Tom Tailor, Bugatti, Van Dalen,

Amber companies like Otto AGN (Germany),Leder und
Schuh (Austria), Elcorte Ingles (Spain), Garrett (Italy) our
presence is in Netherlands, France, Sweden, Lithuania,
Belgium etc.
 Company’s brand VIANT growing 15%-20% in market
every year we are also the biggest vendor for reputed
 brands like LEE COOPER, Provogue , Buckaroo and
United Colors of Benetton for the Indian market.

CHAPTER 2

MEANING AND CONCEPT OF

EARNING AND PROFIT

1.MEANING OF EARNING AND PROFIT

“Earning means profit earned, literally earning is synonym

of profit or income”. There are two concepts of income.
According to first concept, income is the amount with
which the revenue earned during a period exceeds the
cost of replacing the assets used up to obtain the revenue.
On the contrary according to second concept, income is
the amount with which realized sales revenue for a period
exceeds the historical cost 9 measured in money spent,
regardless of their purchasing power) of the assets used
up to obtain the revenue.

As the study is based on,” Income statement and trend of

earnings of U.V Overseas that is why in the present work
income or profit has been studied under two heads i.e.,
Gross Profit and Net Profit.
(A) Gross Profit: Gross profit measures the relationship
of gross profit to net sales and is usually represented as
a percentage. Thus, it is calculated by dividing the gross
profit by sales:
Gross Profit
Gross Profit Ratio = ------------------ × 100
Net Sales

The gross profit ratio indicates the extent to which

selling prices of goods per unit may decline without
resulting in losses on operations of a firm. It reflects the
efficiency with which a firm produces its products. As
the gross profit is found by deducting cost of goods sold
from the net sales, higher the gross ratio (G/P ratio)
better the result. There is no standard norm for gross
profit ratio and it may vary from business to business
but the gross profit should be adequate to cover the
operating (administrative and office expenses, selling
and distribution expenses) and to provide for fixed
charges, dividends and accumulation of reserves. A low
gross profit ratio generally indicates high cost of goods
sold due to unfavorable purchasing policies, lesser sales,
lower selling prices, excessive competition, over –
investment in plant and machinery, etc.
A comparison of gross profit ratio over time or for
different firms in the same industry is a good measure
of profitability. But any significance change in the ratio
should be throughouly investigated because an increase
in the G/P ratio occurs not only by a change in economic
factors like increase in selling price without any
corresponding proportionate increase in cost or
 decrease in costs without any decrease in selling prices
but also due to certain misleading factors like
overvaluation of the closing inventories or
undervaluation of the opening inventories, etc., yet the
G/P ratio is one of the very important ratios for
measuring profitability of a concern.

(B) Net Profit: It is the ultimate and final outcome of the

operation of a business enterprises or concerns. Net
profit or income is the difference between revenues and
expenses. It indicates how successful a business
enterprise or concern has been in achieving it profit goal
for a given time span. Profit indicates an enterprise
accomplishment (revenues) in relation to the effort
required (expenses) in pursuing its operation activities.
When expenses exceed revenue for a period a business
concern or enterprise incurs a net loss.
 In Rushden Heer Vs I.R (1946), the term “profit has been
defined as consisting of a sum arrived at by adding up
the receipt of a business, and by deducting all the
expenses and losses, including depreciation and the like.
It may also be described as the increase in the net value
of the assets of a business over their net value at the
commencement of a given period which arises other
than by capital adjustment”.

Profit and loss A/c is prepared in order to find out the

net profit or loss of the business enterprises or concern
during the year.

(C) Trend: The financial statements may be analyzed by

computing trends of series of information. This method
determines the direction upwards or downwards and
involves the computation of the percentage relationship
that each statement item bears to the same item in
base year. The information for a number of years is
taken up and one year, generally the first year, is taken
as a base year. The figures of the base year are taken as
100 and trend ratios for other years are calculated on
the basis of base year. The analyst is able to see the
trend of figures, whether upwards or downward. We
can find out the percentage of change for which the
following formula is used:

Current Year Data

Trend = -------------------------- × 100

Base Year Data

These percentage changes, calculated for each

subsequent year, are termed as trend. When we find
out the percentage change, we can study the
composition of change and determine whether there
has been any improvement or deterioration in the
financial condition and performance of the concern over
a period. Trend analysis is a guide to measure the
 changes that are occurring in the concern from one
period to another.

2.FIXED CAPITAL
Capital which is invested in such a way that cannot be
withdrawn or converted in cash during the continuance of
the concern or firm is known as fixed capital. This
investment remains fixed in the concern as a long term
source and is invested in blocked assets and capital
expenditures. Further fixed capital means that long term
investment in fixed assets and deferred capital
expenditure. The question now arises, what is fixed assets
and deferred capital expenditure. Fixed assets are those
assets which are acquired for the purpose of using them in
the conduct of business operations, and not for re-selling
 to earn profit. It is only by making use of these assets that
the function like production and distribution are being
performed for earning the income. Some examples of
fixed assets are land, Building, Plant and Machinery,
Furniture and fixtures etc. while on the other hand
deferred capital expenditure are those expenditure which
are not incurred repeatedly or which are not of recurring
nature and which do not arise from the present
operations. These expenditure contribute income or
benefit in the future year also.

3.WORKING CAPITAL
Working capital refers to that part of capital which is
required for supporting the day-to-day operations of an
enterprise. Working capital is considered as the life-blood
of any business. Working capital keeps the wheels of the
business moving. It refers to the flow of ready funds
necessary for working of an enterprise.
Working capital is the liquid fund represented by the
excess of current assets over current liabilities [i.e.,
Working Capital = Current assets –Current liabilities].
Working capital is normally available to finance current
operations. It is also known as Circulating or Revolving
Capital, as current assets are changed in the ordinary
course of business from one form to another [ e.g., Cash
Raw material Work-in-progress Finished goods
Debtors Bills receivable Cash again].
Working Capital is required for the following purposes:
(i). To purchase raw materials, spare parts, operating
supplies, etc.
(ii). To pay for wages to direct workers;
(iii). To pay for salaries to indirect workers (i.e., clerical
staff, supervisors and managerial cadres, etc.)
(iv). To pay for other forms of overhead expenditure (i.e.,
cost of fuel, power, service activities, taxes, general
expenses of administration, etc.)
 (v). To pay for selling and distribution of goods (i.e.,
expenses on packing, advertising, salesmanship, after-
sales service, delivery service, etc.)

CHAPTER 3

RESEARCH METHODOLOGY

Objectives of the study

The study was undertaken with the following main objectives

1. To study the income statements and trends of earnings of

U.V.Overseas.
2. To study the various aspect, such as inception, financial
position, growth, role and problem faced by the concern.
 3. To suggest a few guidelines for the possible improvement
in the working of the concern in order to improve their
working.

Source of Information

The various data required to analyze the financial performance

of U.V Overseas, have been collected from the various annual
reports published by the concern. Hence the study of financial
performance has been made through secondary data which are
collected through journals, literature available on the topic,
annual reports, supporting financial statements, balance sheets
and profit and loss account of U. V. Overseas and also as and
when required personal contract and discussion with the
Finance Manager at the U.V Overseas, sikandara, Agra. This
personal contact and discussion can be considered as primary
information, but mainly this study is based on secondary data.
Limitation of the study

The study is limited to two years balance sheet i.e., the financial
years 2012-13 and 2013-14 and on this basis the various
analyses has been done.
CHAPTER 4

INCOME STATEMENT AND RATE OF

EARNINGS

1.INCOME STATEMENT:
Profit is the central theme for almost all business activities.
Decisions about the future of the business largely depend
on the trend of profits or losses. For all these
determination of correct profit is obviously important and
it is a matter to which accountant attaches greater
importance. Legal consequences may also follow if the
figure of profit proves to be materially misleading.
Ascertainment of profit and identification of the part
available for distribution among shareholders are
governed by accepted accounting principles, judicial
pronouncements and the law.
The profit and loss statement generally refers to summary
of all items of income earned or expenses incurred during
an accounting period. It shows the result of operation for a
stated period of time. According to Prof. Carter, “ Profit
and Loss Account” is an account into which all gain and
losses are collected in order to ascertain the excess of gain
over the losses or vice versa” Therefore, to know the
financial status of U.V.Overseas, it is but essential to
deeply scrutinize the profit and loss statement of the last
few years. Table & Graphs shows the Profit and Loss
statement of the corporation for the financial period 2012-
13 and 2013-14 as follows:
Particular 2012- 2013-14 Partic 2012-13 2013-14
2013 ular
To 3,89,17, 5572289 By 3,86,82,8 5,14,38,4
Indirect 652.42 7.80 Gross 77.9 28.96
Expenses profit
To Net 78,57,3 1,80,07, B/D 80,92,134 2,22,92,2
Profit 59.49 765.28 By .01 34.12
indire
4,67,75, 7,37,30, ct 4,67,75,0 7,37,30,6
011.91 663.08 incom 11.91 63.08
e

Table No:-4.1
2.DIFFERENT ITEMS OF INCOME AND
EXPENDITURE

Different items of income and expenditure of U.V.

Overseas as revealed from the profit and loss statement
are as follows:

Items of Income:

a. Difference in Exchange
b. Duty Drawback
c. Exp. Written off
d. Interest credited on FDR
e. Rebate & Discount
f. Service Tax Refund

Items of Expenses
a. Advertisement Exp.
b. Bank Charges
c. Bank Interest
d. Bank Interest on term Loan
e. Bill Discount
f. Bonus
g. Books & Periodicals Exp.
h. Bus Expenses
i. Car Running & Maintenance
j. Depreciation
k. Donation
l. Electricity Charges
m. Export Freight
n. General Expenses
o. Insurance
p. Interest on Partner Capital
q. Printing & Stationery
r. Repair & Maintenance of Buildings
s. Tour & Travelling Expenses
 t. Shoe Fair Expenses
u. Security Expenses
v. Sample Development
w.Salary to Staff
x. Sales Promotion Exp.
y. Other Expenses

3.RATE OF EARNINGS:
Besides creditors, owners and management of a firm/
corporation are also interested in the financial soundness
of the concern. Since profitability is a measure of
operational efficiency, profitability ratio indicates the
efficiency with which the operations of a firm/ corporation
are carried on. The management is eager to measure the
operating efficiency of the firm. Similarly the owners are
interested to know the profitability of a firm, so as to
ensure its operating efficiency and adequate rate of return
on investments. Profitability also indicates public
acceptance of the firm’s product and its competitive
position in the industry. Bankers, financial institutions and
other creditors are keen to measure the operating
efficiency of the firm through profitability ratios as
indicators of its ability to make regular payment of interest
and the borrowed funds. A lower profitability indicates
poor sales, lack of control over expenses and poor profits.
Conversely, a higher profitability indicates more sales,
effective control over expenses, more profits and fair
operating efficiency of the firm.

Profitability ratios can be computed on the basis of sales.

The profitability ratios in relation to sales includes (i) gross
profit ratio (ii) net profit ratio (iii) operating ratio.
PROFITABILITY RATIO ON THE BASIS OF SALES

i. Gross Profit Ratio:

This ratio represents the gross profit on net sales, and
indicates the degree to which the selling price may
decrease without any loss from operations to the
firm. Thus, it reflects the pricing policy of the firm.
It is calculated as follows:

Gross Profit
Gross Profit Ratio = --------------------- × 100
Net Sales

Since gross profit is the difference between sales and

cost of goods sold, this ratio can also be calculated as
follows:
 Sales – Costs of Goods Sold
Gross Profit Ratio = ---------------------------- × 100
Net Sales

The gross profit ratio of the U.V. Overseas during the

financial years 2012-13and 2013-14 based on the
data taken from trial balance for the stated period
depict the following table as follows:

Years Sales Gross Profit Gross Profit

Ratio
2012-13 188431434.3 38682877.90 20.52
2
2013-14 238105884.4 51438428.96 21.60
0
Table:-4.2
 ii. Net Profit Ratio: This ratio is also called as Net
Profit Margin. It is computed by dividing the net profit
after taxes by the net sales for the period. Net Profit
Ratio can be calculated as follows:

Net Profit after Taxes

Net Profit Ratio = ------------------------------ × 100

Net Sales

The net profit ratio measures the profit per rupee of

sales. It is indicative of management ability to operate the
business efficiency not only to recover the cost of merchandise,
operating expenses and the cost of borrowed funds but also to
leave a sufficient margin of compensation to the owners for
providing their capital risk.

An increase in the ratio over the previous year indicates

improvement in the operational efficiency of the business. A
high ratio ensures adequate return to the owners and the
ability of the firm to withstand unfavorable economic
conditions when selling price is declining, cost of production is
rising and demand for the product is falling. Conversely, a low
ratio has the opposite implication. There is no norm for judging
the net profit ratio. However, constant increase in this ratio
over years is a definite indication of improving operational
efficiency of the business.

The Net profit ratio of the U.V. Overseas during the financial
years 2012-13and 2013-14 based on the data taken from trial
balance for the stated period depict the following table as
follows:

Years Sales Net Profit Net Profit

Ratio
2012-13 188431434.3 7857359.49 4.169
2
2013-14 238105884.4 18007765.28 7.562
 0
Table:-4.3

iii. Operating Ratio: This ratio is a complementary of

net profit ratio, and can be obtained by deducting the
net profit ratio from 100. It is calculated by dividing
the total operating expenses by net sales and is
expressed in percentage.
Total Operating Expenses
Operating Ratio = ----------------------------- × 100
Net sales

Total operating expenses includes all costs except

financial expenses such as interest, taxes, dividend
and extra ordinary losses due to theft, fire etc. This
ratio is the most common measures of operating
efficiency of the business. The operating ratio should
not be very high. Higher the ratio the least is the
margin to meet interest, dividend and other financial
 need. A comparison of this ratio over a period of time
will indicate whether the cost element is high or low
in the figure of sales. As a rule, low operating ratio is
favorable while a high operating ratio is unfavorable.
The operating ratio can also serve as a partial
measure of overall profitability, but cannot be used
as a test of financial condition without considering
financial and extra ordinary items.

The Operating ratio of the U.V. Overseas during the financial

years 2012-13and 2013-14 based on the data taken from trial
balance for the stated period depict the following table as
follows:

Years Sales Operating Operating

expenses Ratio
2012-13 188431434.3 7857359.49 4.169
2
2013-14 238105884.4 18007765.28 7.562
 0
Table:-4.4

CHAPTER 5
FLOW OF ASSETS STRUCTURE

Undoubtedly, Capital or finance is the back bone of an industry.

It is the most important factor of production. In the modern
industrial set up more and more capital is needed. Therefore
we can say that financing is the basis for the successful
establishment and working of any business unit or concern. It is
rightly remarked that, capital is the oil of wheels, the blood in
the veins, the marrow of the bones and the spirit of all trade,
commerce and industry. Paucity of finance causes hindrance in
achieving the objectives of the organization.
The flow of Assets structure can be studied under the following
heads
1. Block Assets and Current Assets
2. Ratio of Block Assets to Current Assets
3. Current Assets and current Ratio
 4. Liquid Assets and Liquid Ratio
5. Solvency Ratio

It is explained in detail as follows:

1.BLOCK ASSETS AND CURRENT ASSETS

BLOCK ASSETS

Block Assets are acquired for permanent use and continuous

service rendered by them for a pretty long time. They are
neither meant for resale in the ordinary course of business nor
consumed totally or partially in the business. Thus such assets
are more or less of permanent character and are used for the
purpose of earning profits. The utility of these assets remains
so long as they are in working order. Land, building, plant,
machinery, furniture etc. are some of the examples of fixed
assets.

Out of the fixed assets, land is peculiar in the sense that it is not
subjected to depletion in value by its use. Hence, its valuation is
usually done at cost price. The remaining assets depreciate on
account of their constant use and as such, are of depreciable
nature, they are, therefore, valued at what is popularly known
as a Going- concern value, or Historical or Token Value. The
reason for it is that fixed assets are acquired for the running of
a business and put to their repeated users. They are valued at
cost less a reasonable depreciation written off and any
fluctuation in their prices is not cared for. Thus, market price or
realizable value of these assets is not considered for their
valuation as they are not meant for resale in the market. The
table shows gross block assets in U.V.Overseas from 202-13 and
2013-14 as follows.

GROSS BLOCK ASSETS IN U.V.OVERSEAS FROM

2012-13 AND 2013-14.

Particulars 2012-13 2013-14

Air Conditioner 577045.00 490488.00
Building A/c 13143010.00 11828709.00
Building Under ---- 1326297.00
Construction 370440.00 2615919.00
Car A/c 62349.00 52997.00
CCTV 13366.00 11361.00
Coffee Vending 67560.00 103826.00
Machine 30241.00 66148.00
Computer A/c 86797.00 73777.00
Cooler 14,198.00 12068.00
DIE & MOULDS ---- 460836.00
Digital Camera 4,85,186.00 412408.00
Duct Plant 29851.00 25,373.00
Electric Fan & 294739.00 4,15,966.00
Fittings 1899733.00 27,07,219.00
EPBX System 1916913.00 16,29,376.00
Fire Fighting 22934.00 19,494.00
Equipment 6994237.00 59,45101.00
Furniture and 18406.00 15,645.00
Equipment 43,02572.00 51,22,572.00
Generator Set 9696.00 24,926.00
Imported Die 86,181.00 73,254.00
Imported 5403.00 4,593.00
Machinery --- 81089.00
Inverter 55,33010.00 4695105.00
Land at Baipur 2,40368.00 204313.00
Mobile phones
MOTOR CYCLE 5,89,139.00 500768.00
Office Equipment 5,480.00 4658.00
Photo copier M/C 59,156.00 50283.00
Plant & Machinery 1,92,748.00 2931528.00
A/c 2,34,110.00 258771.00
Plant & Machinery ( 9,780.00 8313.00
High Seas Purchase) 241072.00 204911.00
Power Distribution 244156.00 321903.00
panel 648306.00 551060.00
Refrigerator 3869.00 3289.00
Scooter A/c 55271.00 46980.00
Shoe Last ------------------- -------------------
Software A/c 4,02,87,322.00 4,33,01,324.00
Submersible ------------------- -------------------
Tata Magic
 Tools & Dies
Transformers

CURRENT ASSETS:

Current assets, in the words of Alexander Wall, “are such assets

as in the ordinary and natural course of business move onward,
through the various processes of production, distribution and
payment for goods, until they become cash or its equivalent, by
which debts may be rapidly and immediately paid.” Thus
current assets are those operating assets used in a business
which can be converted into cash during the short time
operation of a business.
To put it in other words, assets acquired through cash and easily
convertible into cash, during the normal course of business are
known as current assets. This short time operation or normal
courses take a period of one year because the cycle is
completed in not more than one year period. In some rare case,
it may take more than one year. Whatever may be the time
involved in the completion of this cycle, current assets should
be classified always on the basis of their use and not on the
basis of time. All assets which are acquired for re-selling during
the course of business are to be treated as current assets. From
the point of view of analyst the following are generally included
in current assets.

i.Cash in hand and cash at bank

ii. Book debt or debtor or accounts receivables
iii. Bills receivables also known as notes receivables
iv. Stocks: Raw materials, work in progress, finished goods.
v. Government and other marketable securities
vi. Advance payments (prepaid expenses)

The above list is not final and exhaustive in the sense that
particular asset is current or not is to be decided by the
purpose of its acquisition and its use. The current assets in
U.V.Overseas can be studied from the table.

The table shows Current assets in U.V.Overseas from 202-13

and 2013-14 as follows.

CURRENT ASSETS IN U.V.OVERSEAS FROM 2012-13

AND 2013-14.

Particulars 2012-13 2013-14

Stock 18378102.00 21964705.28
Deposits 494991.00 326542.00
Loans & Advances ---- 840000.00
Sundry Debtors 33948763.40 28344196.69
Cash –in-hand 1592343.58 1894113.58
Bank Accounts 38231.68 5052005.72
DBK Receivable A/c 3358724.00 2338466.00
ECGC Exp Prepaid A/c 1320.00 23566.00
Foreign Currency in 108988.00 125398.80
Hand 32,450.06 32450.06
Interest Accrued on FDR 354395.00 303767.00
Pre-Operative Expenses 57065.00 108915.00
Prepaid Insurance 15,000.00 15000.00
Prepaid pollution --- 3552864.00
Registration Exp.
Sale of Focus Product 6573.00 37726.00
(RECEIABLE) ---- 24319.00
Sales Tax Appeal 2123726.00 1316227.00
Service Tax Receivable
A/c. 953221.02 903340.56
Subsidy on Plant & 150,000.00 ----
Machinery (IDLS) ------------------- --------------------
Receivable 61613893.74 67203602.69
Vat on Assets ------------------- --------------------
MDA GRANT
RECEIVABLE

2.Ratio of Block Assets to Current Assets

As explained earlier, block assets are assets of permanent

nature and are used in the corporation permanently.
These assets are exhausted during their life time while in
use in the concern. On the other hand Current assets are
assets which are not retained for more than one year. The
following table shows the ratio of block assets to current
assets in U. V. Overseas.

Ratio of Block Assets to Current Assets in U.V.

Overseas from 2012-13 to 20123-14.

Years Net Block Current Ratio

Assets Assets
a B C d = b/c ×100
2012-13 4,02,87,322.0 61613893.74 65.386
64.433
0 67203602.69
2013-14
4,33,01,324.0
0
 Table:-5.1
3.CURRENT ASSETS AND CURRENT RATIO

CURRENT ASSETS:

Current assets in the words of Alexander Wall “are such

assets as in the ordinary and natural course of business
move onward, through the various processes of
production, distribution and payment for goods, until they
become cash or its equivalent; by which debts may be
rapidly and immediately paid.” Thus, current assets are
those operating assets used in a business which can be
converted into cash during the short time operation of a
business. To put it in other words, assets acquired through
cash and easily convertible into cash during the normal
course of business are known as current assets. This short
time operation or normal course taken a period of one
year because the cycle (cash assets cash) is completed in
not more than one year period. In some cases, it may take
more than one year. Whatever may be the time involved
in the completion of this cycle, current assets should be
classified always on the basis of their use and not on the
basis of time. All assets, which are acquired for re-selling
during the course of business, are to be treated as current
assets.

CURRENT RATIO

The current ratio of any concern may be known as the

ratio between current assets and current liabilities which
is calculated using the following formula-

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

Here, current assets of a firm means cash and those assets

which can be converted into cash within a short period of
time not exceeding one year in ordinary course of business
and includes cash and bank balances, marketable
securities, inventory of raw material, semi –finished (work-
in-progress), finished goods, debtor, bills receivable and
prepaid expenses. The current liabilities include bills
payable, accrued expenses, bank overdraft, provision for
taxation, dividends payable and long term debt maturing
in the current year.
 The current ratio indicates the short term financial
soundness of the company. It judges whether current
assets are sufficient to meet the current liabilities. The
corporation must be able to meet its current obligations
out of the current assets. It should not depend upon its
long term sources to pay its short term liabilities.
Further from the study of trial balance of U. V. Overseas
during the financial years 2012-13 and 2013-14.

Current Ratio of U. V. Overseas

Years Current Assets Current Ratio
Liabilities
2012-13 4325791.74 35849921.49 1.205
2013-14 45238897.41 50787749.94 0.890

Table:-5.2

4.LIQUID ASSETS AND LIQUID RATIO

Liquid assets are those assets which may be converted into
cash as and when desired without any material capital loss. All
current assets such as cash in hand, cash at bank, debtor, stock,
short term investment and bills receivables are expected to be
converted into cash within the normal operating cycle of the
business. Excluding stock, all other current assets are likely to
be converted into cash as and when required without any loss.
Hence, all current assets minus stock are said to have an
element of liquidity and therefore they are known as liquid
Assets. To put it in the form of equation:
Liquid Assets = Current Assets – Stock of all types.

LIQUID RATIO

Liquid Ratio is a more rigorous test of liquidity than the current

ratio. The term liquidity refers to the ability of a firm to pay its
short-term obligations as and when they become due. The two
determinants of current ratio, as a measure of liquidity, are
current assets and current liabilities. Current assets include
inventories and prepaid expenses which are not easily
convertible into cash within a short period.
Quick ratio may be defined as the relationship between
quick/liquid assets and current liabilities. An asset is said to be
liquid if it can be converted into cash within a short period
without loss of value. In that sense, cash in hand and cash at
bank are the most liquid assets. The other assets which can be
included in the liquid assets are bills receivable, sundry debtors,
marketable securities and short –term or temporary
investments. Inventories cannot be termed to be liquid asset
because they cannot be converted into cash immediately
without a sufficient loss of value. In the same manner, prepaid
expenses are also excluded from the list of quick assets because
they are not expected to be converted into cash. The quick
ratio can be calculated by dividing the total of the quick assets
by total current liabilities.

Thus,

Liquid Assets
Liquid Ratio = -----------------------
Current Liabilities
The table gives the liquidity ratio of U.V. Overseas
from 2012-13 and 2013-14.
Years Liquid Assets Current Ratio
liabilities
2012-13 21261086.46 35849921.49 0.593
2013-14 6092784.41 50787749.94 0.119
Table:-5.3

5.SOLVENCY RATIO
Solvency refers to the ability of the firm/ concern to meet
interest and repayment schedules associated with its medium
and long term obligation. It also includes the measures of
ability of the firm to redeem long term debt and debenture on
agreed dates or in due installment. Solvency ratios tell us about
the long term solvency of the firm. If the total assets of the firm
are more than it total liabilities, the concern is said to be
solvent. While on the other hand if the total liabilities exceed
total assets, it is said to be an insolvent position and considered
to be most dangerous for the concern. So the solvency test is
the test of financial soundness and long term debts paying
capacity of the concern.
Numerically, the solvency ratio can be expressed as follows:

Total Assets
Solvency Ratio = -------------------------------
Total outside Liabilities

The firm is supposed to be solvent, if its solvency ratio is more

than one, i.e., total outside liabilities is lesser than total assets.
In case, the ratio is less than one, it will mean total liabilities are
more than total assets and it will show that the firm will not be
able to meet its liabilities. It shows the financial unsoundness
and the state of probable insolvency.
Further from the study of trial balance of U.V. Overseas during
the financial years 2012-13 and 2013-14, the solvency ratio
works out to be as follows:

SOLVENCY RATIO OF U.V.OVERSEAS

Years Total Assets Total Outside Ratio
Liabilities
2012-13 101901215.7 61781089.99 1.649
2013-14 5 78985085.76 1.399
110504926.6
9

Table:-5.4

CHAPTER 6

TREND OF EARNINGS
Trend simply means a general tendency or movement of
variables towards a certain direction i.e., downward, upward or
fluctuating. Trend is calculated by using the following formula:

(a) On fixed Base :

Current Year Data

Trend = --------------------------- x 100
Base Year Data

(b) On Chain Base:

Current Year Data

Trend = --------------------------- x 100
Previous Year Data

1. TREND OF NET PROFIT:

The primary objective of a business undertaking is to earn

profits. Profit earning is considered essential for the
survival of the business. In the words of Lord Keynes,
“Profit is the engine that drives the business enterprise”. A
business needs profits not only for its existence but also
for expansion and diversification. The investors want an
adequate return on their investments, workers want
higher wages, creditor want higher security for their
interest and loan and so on. A business enterprise can
discharge its obligations to the various segments of the
society only through earning of profits. Profits are thus, a
useful measure of overall efficiency of a business. Profits
to the management are the test of efficiency and a
measurement of control to owners, a measure of worth of
their investment; to the creditors, the margin of safety; to
employees, a source or fringe benefits; to Government, a
measure of tax-paying capacity and the basis of legislative
action; to customers, a hint to demand for better quality
and price cuts; to an enterprise, less cumbersome source
of finance for growth and existence and finally to the
country, profits are index of economic progress .
 Profitability ratios are calculated to measures the overall
efficiency of the business.
The table given below shows the trend of net profit before
taxes from the financial year 2012-13 to 2013-14.

Trend of Net Profit before taxes in

U.V.Overseas
(Based on Fixed Base Index Numbers)

Years Net profit Calculation Trend

Before Taxes
2012-13 7857359.44 --- 100
2013-14 18087765.2 18087765.28/7857359.44x10 230.20
8 0
Table:-6.1

Sources: on the basis of Trial Balance from the year 2012-13 to

2013-14.
From the table it is clear that the trend in the financial year
shows an increasing trend and this is due to increase in net
profit and if this type of trend continues to follows in the
coming year, then the concern financial position can improve.

2. TREND OF EARNING ON TOTAL CAPITAL

EMPLOYED AND WORKING CAPITAL

Return on capital employed establishes the relationship
between profits and the capital employed. IT is the
primary ratio and is most widely used to measures the
overall profitability and efficiency of a business. The trend
of earning on total capital employed is study in order to
ascertain the earning capacity from investors or lenders
and also from owner’s point of view. The table below gives
the trend of earnings on total capital employed.
 Trend of Earning on Total Capital Employed

Years Net profit Total Capital Rate of Trend of

Before Tax Employed earnin Earning
g (Based
on Fixed
Base)
2012-13 7857359.44 40120125.75 19.58 100
2013-14 18087765.28 31519840.93 57.38 293.05
Table:-6.2

Source: U.V. Overseas trial Balance from the year 2012-13 to

year 2013-14.

It shows an increasing trend and this is due to increasing in

net profit

TREND OF EARNING ON WORKING CAPITAL

Capital required for a business can be classified under two
main category viz.,
(i) Fixed Capital, and
(ii) Working Capital

Every business needs funds for two purposes- for its

establishment and to carry out its day-to-day
operations. Long-term funds are required to create
production facilities through purchase of fixed assets
such as plant and machinery, land, building, furniture,
etc. Investments in these assets represent that part of
firm’s capital which is blocked on a permanent or
fixed basis and is called fixed capital. Funds are also
needed for short-term purposes for the purchase of
raw materials, payments of wages and other day-to-
day expenses, etc. These funds are known as working
capital. In simple words, working capital refers to that
part of the firm’s capital which is required for
financing short term or current assets such as cash,
marketable securities, debtors and inventories.
Funds, thus, invested in current assets keep revolving
fast and are being constantly converted into cash and
this cash flows out again in exchange for other
current assets, it is also known as revolving or
circulating capital or short-term capital.
According to Genestenberg, “ Circulating capital
means current assets of a company that are changed
in the ordinary course of business from one form to
another, as for example, from cash to inventories,
inventories to receivables, into cash.
Not only the existence of working capital is essential
for survival and progress of the industry, but it must
be adequate also. Adequate working capital implies
that it should neither be excessive nor inadequate of
the firm’s requirements. Thus the calculation of trend
of earning on working capital becomes imperative,
which is as follows:
Trend of Working capital of U.V.Overseas.

Years Working Calculations Trend

Capital
( WC= CA –
CL)
2012-13 25763972.25 100 100
2013-14 1641852.75 1641852.75/25763972.25 63.72
x 100
Table:-6.3

Source: Balance sheet of U.V.Overases

The trend decrease due to decrease in working

capital and the current liability in the financial year
2013-14 has increase to Rs 50787749.94 from Rs
3584992.49 in the financial year 2012-13.

TREND OF ACID TEST RATIO

Acid test ratio, is a more rigorous test of liquidity than the
current ratio. The term liquidity refers to the ability of a
firm to pay its short-term obligations as and when they
become due. The two determinants of current ratio, as a
measure of liquidity are current assets and current
liabilities. Current assets include inventories and prepaid
expenses which are not easily convertible into cash within
a short period. Acid test ratio may be defined as the
relationship between liquid assets and current liabilities.
An asset is said to be liquid if it can be converted into cash
within a short period without loss of value. In that case,
cash in hand and cash at bank are the most liquid assets.
The other assets which can be included in the liquid assets
are bill receivable, sundry debtors, marketable securities
and short term investments. Inventories cannot be termed
to be liquid asset because they cannot be converted into
cash immediately without a sufficient loss of value. The
acid test ratio can be calculated by dividing the total of
quick assets by total current liabilities. Thus,
 Liquid Assets
Acid test Ratio = -----------------------
Current Liabilities

By observing and studying the various annual reports,

balance sheet ,of U.V.Overseas, the acid test ratio is
shown in the table as follows:

Acid Test Ratio of U.V overseas from 2012 to 2014

Years Liquid Assets Current Ratio

Liabilities LA/ CL
2012-13 2126108.46 35849921.49 0.593
2013-14 6092784.41 50787749.94 0.119
Table:-6.4
Sources: Balance sheet of U.V.Overseas from financial year
2012 t o 2014.
The table clearly shows that the ratio is less than 1 , which
is the ideal ratio for any concern.

Trend of Acid Test Ratio

Years Acid Test Calculations Trend

Ratio based on
Fixed
2012-13 0.593 -- 100
 2013-14 0.119 0.119/0.593x 20.07
100
Table:-6.5
The trend shows an alarming stage for the concern
because its trend is decreasing and in the future the
organization should increase its ratio by converting its
stock into debtors or cash.

3. FUND FLOW STATEMENT

The basic financial statements, i.e., the balance sheet and

profit and loss account or income statement of business,
reveal the net effect of the various transactions on the
operational and financial position of the company. The
balance sheet gives a summary of the assets and liabilities
of an undertaking at a particular point of time. It reveals
the financial status of the company. The assets side of a
balance sheet shows the deployment of resources of an
undertaking while the liabilities side indicates its
obligations, i.e., the manner in which these resources were
obtained. The profit and loss account reflects the results of
the business operations for a period of time. It contains a
summary of expenses incurred and the revenue realized in
an accounting period. Both these statements provide the
essential basic information on the financial activities of a
business, but their usefulness is limited for analysis and
planning purposes. The balance sheet gives a static view of
the recourses (liabilities) of a business and the uses
(assets) to which these resources have been put at a
certain point of time. It does not disclose the causes for
change in the assets and liabilities between two different
points of time. The profit and loss account, in a general
way, indicates the resources provided by operations. But
there are many transactions that take place in an
undertaking and which do not operate through profit and
loss account. Thus, another statement has to be prepared
to show the change in the assets and liabilities from the
end of one period of time to the end of another period of
time. The statement is called a Statement of change in
Financial Position or a Funds Flow Statement.
The Funds Flow Statement is a statement which shows the
movement of funds and is a report of the financial
operations of the business undertaking. It indicates
various means by which funds were obtained during a
particular period and the ways in which these funds were
employed. In simple words, it is a statement of sources
and application of funds.

Meaning and of Funds:

The term fund has been defined in a number of ways.
 (a) In a narrow sense, it means cash only and a funds
flow statement prepared on this basis is called a cash
flow statement. Such statement enumerates net effects
of the various business transactions on cash and takes
into account receipts and disbursements of cash.
(b) In a broader sense, the term funds refers to money
values in whatever form it may exist. Here funds means
all financial resources used in business whether in the
form of men, material, money, machinery and others.
(c) In a popular sense, the term funds means working
capital. i.e., the excess of current assets over current
liabilities. The working capital concept of funds has
emerged due to the fact that total resources of a
business are invested partly in fixed assets in the form
of fixed capital and partly kept in form of liquid or near
liquid as working capital.

CONCEPT OF FLOW OF FUNDS

The term flow means movement and includes both inflow and
outflow. The term flow of funds means transfer of economic
values from one asset of equity to another. Flow of funds is said
to have taken place when any transaction makes changes in the
amount of funds available before happening of the transaction.
If the effect of transaction results in the increase of funds, it is
called a source of funds and if it results in the decrease of
funds, it is known as an application of funds. Further in case the
transaction does not change funds, it is said to have not
resulted in the flow of funds. According to the working capital
concept of funds, the term flow of funds refers to the
movement of funds in the working capital. If any transaction
results in the increase in working capital, it is said to be a
source or inflow or funds and if it results in the decrease of
working capital, it is said to be an application or out-flow of
funds.

DEFINITION OF FUNDS FLOW STATEMENT

Funds Flow Statement is a method by which we study changes
in the financial position of a business enterprise between
beginning and ending financial statements dates. It is a
statement showing sources and uses if funds for a period of
time.

According to Foulke-“A statement of sources and application of

funds is a technical device designed to analyze the changes in
the financial condition of a business enterprise two dates.”

In the words of Anthony-“The funds flow statement describes

the sources from which additional funds were derived and the
use to which these sources were put.”

Thus, funds flow statement is a statement which indicates

various means by which the funds have been obtained during a
certain period and the ways to which these funds have been
used during the period. The term funds used here means
working capital, i.e., the excess of current assets over current
liabilities.
CHAPTER 7
FINDING

 The net profit has increased from 7857359.49 to

18007765.28 that is 129% of the previous year & this is
 mainly due to excessive of demand of shoes in
International market.

 The indirect income also shows the industry trend during

the year 2013-2014 & it was 22292234.12 rupees that is
175% approx. of the previous year.

 The indirect expenses also increased mainly due to bank

charges, electricity charges, and salary to staff.

 The Gross Profit ratio has also increased selectively that is

5.26% from the previous year 2012-2013.

 In the similar way Net Profit ratio has also increased from
4.169% to 7.562%.

 The operating expense of the concern has also increased

from 7857359.49 to 18007765.28 that is 129.18%.
 Overall the concern shows a positive trend that is both the
gross profit & net profit are increasing.

 Fixed asset is increased in the financial year 2013-2014

and is mainly due to building value increased due to
construction and purchase of furniture and equipment and
also purchase of land at Baipur.

 The increased in fixed asset clearly shows the indication

that the organization has bright future in the coming year
because the business in expanding.
 The current year has also shows the increasing trend and
the cash in bank balance has increased which indicate a
good sign and compare to liquidity of the concerns.

 The Debtor has decreased from the previous year that is in

the year 2012-2013 it was 33948763.40 to 28344196.69 in
the year 2013-2014.
 But the concern should take proper care to convert
debtors onto cash by giving some cash discount.

 Block asset ratio of current asset has decreased from

65.38% to 64.43%.

 The current ratio of the concern is below 1 in the financial

year 2013-2014 which is a serious concern from the
organization because the current liability has increased by
41.67% from the previous year. The Idle current ratio is 2:1
the company should at least attain this ratio and that is
only possible if current asset of the company is increased
and current liability should be decreased.

 The Idle liquid ratio is 1:1 but the concern liquid ratio is
0.59 in the year 2013 and 0.119 in the year 2013-2014
which again a serious concern for the organization of this
is not taken seriously then the company will face the
liquidity position in the future.
  The solvency ratio of the concern is 1.65 in financial year
2012-2013 as the total asset are more than total liability
the solvency position of concern is treated as good.

 The total liability of the concern has increased by 27.85%

and it is a big concern or the organization because Net
profit and Gross profit increasing in single figure.

CHAPTER 8
CONCLUSION

 The current ratio should be at least 2:1 which shows a

good sign from the point of view of creditors.

 The liquidity position is not satisfaction and it shows the

doubtful financial condition because ratio is less than idle
 ratio which is 1:1 so in the near future the concern has so
increased the liquidity ratio.

 The gross profit ratio is a single figure it should be at least

be double figure.

 The net profit has increased but as compare to net profit

ratio it is 7.56% which should also be in double figure, so
that confident moral of the employee should be increased.

 The operating expenses has to be controlled in order to

increase the profit and the various office and
administration expenses has to be controlled in order to
achieve the target.

 The company has invested money in Plant and Machinery

and also purchase land at Baipur which shows the positive
sign from the point of view of the company.
The Company has also invested money about 35lacks in various
bank in Axis and Canara Bank from time to time.

BIBLIOGRAPHY

Books AUTHORS
Anthony, Robertson Management Accounting text and
cases
Bahadur Murao Management Accounting
Chaudari, S. B. Analysis of Company Financial
Statement
Gupta, S.P. Management Accouinting
Jain, S.P., & Narang, K.L. Accounting
Khan & Jain Financial Management
Kuchhal, S.C Financial Management
Pandey, I.M Financial Management
Shashi K Gupta Financial Management
Shukla, M.C., Grewal Advanced Accounting
and Gupta

ANNUAL REPORTS
The annual report of U.V.Overseas from Year 2012 to Year 2014

NEWS PAPERS
Amar Ujala (Hindi)
Hindustan times
The Economic Timers
The Times of India.