Financial Statement Analysis.
Financial Statements are summaries of monetary data about an enterprise. Hence Financial Statement Analysis will help one to assess the Viability, Stability, Profitability and Liquidity of an enterprise. In this Assignment, an attempt, to analyze the financial performance of two companies in Textile Industry (S.Kumar Nationwide Ltd. & Gokaldas Export Ltd.) has been made. As the result of this assignment I found the performances of S.Kumar Nationwide Ltd. is better than Gokaldas Export Ltd.
Financial statement analysis is a technique of answering various questions regarding the performance of the firm in the past, present and future. So in this assignment we have used the financial statement analysis to compare the performances of two companies S.Kumar Nationwide Ltd. & Gokaldas Export Ltd. in Textile Industry.
This assignment is specially based on the secondary data. The required financial data were extracted from the financial statements of the selected companies. The qualitative information was collected from website www.indiainfoline.com. This assignment covers the time horizon of the Financial year 2007, 2008 & 2009.
Common Size BalanceSheet & Income Statement A company balance sheet, that displays all items as percentages of a common base figure is referred to Common Size BalanceSheet & IncomeStatement. • In liability side Total Liabilities is taken as a base figure and all other liabilities are calculated as percentages. • In assets side Total Assets is taken as the base figure and all other asset items are calculated as percentage. • In Common Size Income Statement, Sales Turnover is taken as the base figure to which all the incomes and expenses are calculated as percentage.
Page - 2 of 24
Ratio Analysis Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and performance of a business concern. Simply, ratio means the comparison of one figure to other relevant figure or figures. In this assignment I have used the below ratios for the financial analysis. ✦ Profitability Ratio ✓ Operating Profit Ratio ✓ Net Profit Ratio ✦ Rate Of Return Ratio ✓ Return On Total Assets (ROTA)Ratio ✓ Return On Capital Employed Ratio ✓ Return On NetWorth Ratio ✦ Liquidity Ratio ✓ Current Ratio ✓ Quick Ratio ✦ Total Assets TurnOver Ratio ✦ Solvency Ratio ✓ Debt To Equity Ratio ✓ Interest Coverage Ratio
Comparison Of Trends All the ratios are calculated for the year ending 2007, 2008 & 2009 and a comparison of these ratios are made between the two companies.
Reasons For Choosing The Firms
Textiles Industry Today textile sector accounts for nearly 14% of the total industrial output in India. Moreover, total textile export during the year 2009 - 2010 has reached over 83,700 Crores Indian Rupee which accounts for more than 30% of the total exports. It is the largest industry in terms of foreign revenue and export. As we can see Textile Industry plays a major role in Indian Economy, this influenced me to take up Textile Industry for my Assignment.
Page - 3 of 24
S.Kumars Nationwide Ltd. ( SKNL ) S.Kumars Nationwide Ltd. is my selected firm. SKNL is one of India’s leading textile and apparel company which grew from a turnover of 50 Lakh in 1948 to 2,350 Crores in 2009 and carrying on its achievements. Transformation of the company took place when Nitin Kasliwal took over the reins of his family run textile business. SKNL is an industry which is only into Textile Sector and has 6 brands namely Reid & Taylor, Belmonte, S.Kumars, Uniformity, Carmichael House and Stephens Brothers. Through these brands they are very strong in domestic market. Their main strength is their manufacturing units which produces over 2,00,000 meters of High-Quality fabrics each day. SKNL considers Manufacturing, Distribution, Brands & Human Capital as their 4 pillars for success. The business at SKNL is...