Chapter 1 Introduction
Introduction To Business
Objectives Of Project
Scope Of Project
1
MONSTER FITNESS GYMNASIUM Introduction: Here we can discuss the importance of monster fitness gymnasium and its need and scope for the society and for people. Monster fitness offer various services to help members meet their fitness goals. The ultimate goal of monster gym is to help make its members healthier and the main purpose of gym is to help their members to get in shape. We employ good personal trainer. Personal trainers help safely take members workouts to the next level and at the same time the members will work harder than ever before. The desire of my gym is to help members learn new exercises, techniques and training methods to meet their weight-loss, muscle building, heart health or sports performance goals.
Objectives of the Project 1. To learn about the banking sector in financing. 2. To understand the various procedures required to take loan. 3. To study financial details involved in setting up new business. 4. To study various interest rates provided by the banks. 5. To get detailed description of the various steps associated in obtaining loan from banks or financial institutions. 6. To study every minute financial detail involved in setting up of a business. 7. To practically understand the functioning of the government in the business world via taxes, patents, licenses and registrations. 8. To learn financial side of entrepreneurship. 9. To know the preparation of projected financial statements. 10. To learn deep analysis of financial statements .
2
Justification of the objectives: To understand procedures:
one of the most important objective of the study to understand the various procedures of the bank required to take loan. This is very important to understand as veriouse banks has different procedure for giving loan and different kind of businesses required loan for different purposes and for different periods. 1. To understand the financial details: this is the another objective to understand the financial details involved in the setting up new business. This is really crucial for a person who wants to make thiere own business. It will help the enterprenioure to know how to run thiere business. 2. To study the interest rates: another objective of the study is , to understand the interest rates provided by the bank. This is very important to know , which bank give how much loan and charge the person for the giving loan and for how much time. Which will help the business in operating thiere activities and will utilize their resources in efficient manner. 3.
To know the financial side of the entrepreneurship:
another objective of the study is to understanding the financial side of the entrepreneurship, means to be able to run the business in efficient manner which will be beneficial for the future of the business and how to finance the activities and other aspects of the business. 4.
Deep analysis of the financial statement:
This is the another objective of the study to learn about the deep analysis of the financial statement. Financial statement is one of the crucial aspect of the financial management as it show the financial strength and weaknesses of the firm, thus it is important to have sufficient knowledge about it for running existing and new business.
3
SCOPE OF THE STUDY 1. The study has a scope to analyze the different loan Schemes of bank and choose best among them. 2. The study provides information regarding documentation, paper work and other important factors involved in getting term loan. 3. To be competitive and successful in modern corporate world, constant capital flow is essential. Whether to expand your business or to relocate your production unit to some other place for cost effectiveness, you require finance. It’s not always possible to fund them through interest sources. A delay of a few days can cost you in millions.
4
Chapter 2
Research Methodology
Methods of Data collection
Primary Data
Sources of Primary Data
Secondary Data
Sources of secondary data
Tools and technique so Data analysis
5
RESEARCH METHODOLOGY
6
Research Methodology: METHODS OF DATA COLLECTION PRIMARY DATA:
The information for this project has been collected through primary and as well as secondary data sources. In primary data collection, the information has been collected through personal visit to banks, in the process of collecting primary data I collected this through staff members of the bank, and it was regarding the procedure for taking the loan from the bank, and also the procedure of repayment of that loan. Moreover, I also done the survey by visiting one of the gymnasium.
Sources of Primary Data: Primary data is the data which are collected directly from the respondent or the data which are collected for the first time. So there are various sources of the Primary Data. Interview: interview is one of main source of the primary data in which two parties are
included in the term of interviewer and interviewee for the purpose of obtaining the valuable information for the study research related problem. In which interviewer is asking the question and interview answer the question. Like wise I collected the primary data for this project report through interview in which I meet the manager of the bank and staff members of the bank and collected the related data for the research. Questionnaire:
In order to collected the data from the respondent by asking the questions , for this purpose appropriate questionnaire should be designed in which questions are prepare to gain valuable information for the related problem. So I also prepared the sort of questions as a questionnaire to obtain the data which are important from the bank and as well as from the Gym owner about the montster fitness gym process, fees, cost of machinery, manpower and so on.
7
Observation:
Another important source of primary data in which the researcher obtain the information through direct observation or indirect observation. I also gain the primary data through the observation of the bank transaction process, like getting deposit from the people and giving to the other people as loan and recharge them for interest.
SECONDARY DATA: the secondary data provide for a basis for the research work and comprises of data collected from previous work in the same area and is present before the current research . the secondary data collected for research purposes is based on different aims and objectives from the current research which act as a disadvantage to the current research
Sources of Secondary The secondary has been collected from the brochures of the bank, the boards with the information displayed in the bank premises and, from the bank website regarding the taking and repayment of loan.
Tools and Techniques of the Data analysis Data Processing
Once the data has been collected it has to be processed and reduced so that it can be analyzed by the researcher. The data which is collected through the study is usually in the raw form. This form of data often has errors and inconsistencies which are not relevant to the study. Likewise when I collect the data it has many errors, then the analysis which are done through me and process the data to become meaningful and get appropriate form.
8
Editing:
Another method of the Data analysis is editing. Raw data is subjected to many omissions and errors which are occur during the collecting data process. In editing these errors are corrected then the reader is not getting confused. So editing of data is done by me when I collected the data, and corrected the all errors and confusions which are involved the collected data. Just like separating the expenditures from the revenue of the Gym (monthly. Tabulation: tabulation is the method of presenting the data in the form of table
so then the result can be interpreted easily. The purpose of the tabulation is to present maximum possible information in minimum possible space. So the data which are collected by also tabulated in the appropriate manner in which the reader can get easily the purpose of the report writing.
9
Chapter 3
Profile of the company
Vision and mission
Purpose of the loan
Loan proposal
Documents required for loan proposal
10
PROFILE OF THE COMPANY
Profile of the company Name of gymnasium
Monster fitness gymnasium
Location
NIBM
Road
near
Jyoti
Restaurant
Kondhwa Pune 411048. Year of establish
2015-16
Email
[email protected]
Telephone number
8407959200
Website
www.mfg.com
Contact person
Mohammad Salim Rahimi
Name of executive
M. Salim Rahimi
manager
MISSION AND VISSION OF MONSTER FITNESS GYMNASIUM 1. We are committed to providing unparalleled educational and recreation programs, service and facilities in order to promote health, wellness and activities that strengthen the university and local community. 2. Our mission is to provide an Entertaining, Educational, Friendly and Inviting, Functional and Innovative experience of uncompromising quality that meets the health and fitness needs of the entire society. 3. We are here to provide a unique environment in which anyone can be comfortable. 4. We are committed to providing a safe community oriented environment for people of all skill and fitness levels.
11
PURPOSE OF THE LOAN
1. The purpose of taking loan is to start new gym, which can’t be financed only from own fund. 2. The firm requires term-loan RS. 1452500, which will be repaid within 5 years. 3. The basic purpose of taking loan is to finance the working capital. 4. To purchase machineries. 5. To purchase furniture and other fixed asset.
LOAN PROPOSAL Detailed report based on a potential borrower’s application and creditworthiness, presented usually by a bank’s officer with his or her comments to a senior loan officer or the bank's loan committee.
12
How to prepare business proposals?
8 steps in preparing business proposals: Step 1
Submit a cover letter with your proposal this should be a brief introduction to your company, the amount of loan requested and purpose of loan. Step 2
Being your proposal with general information, including the company name and address, names and social security number of the principals, the purpose of the loan, the exact amount of money needed and detailed plans for what will be done with the money. Step 3
Describe your business in detail, include information on prior and projected performance unique aspects of your business and the legal and ownership structures. Step 4
Provide complete information, identity your competition and explain how your business stuck up. Submit detail on your current customer base. Step 5
Prepare management profiles for all owners and key employees, highlight their education, past accomplishments and qualifications. Step 6
Submit complete information concerning your last 5 years of operation, if you are just starting out, provide projected balance sheet and income statements, and also include personal financial statements from all owners and information on any collateral that will be placed as security for loan. Step 7
Proofread the document, double checking of spelling, grammar and the facts contained in the proposal. Step 8
Submit your proposal with each copy of the loan package you are required to return, remember to keep a copy for yourself.
13
Documents required for business or loan proposal.
1. Submit license. 2. Submit 5 years estimated balance sheet. 3. 5 years income tax Chillan. 4. Submit KYC (know your customer) documents, ration card, election card, photo, PAN card and light bill. 5. Person must be shareholder of bank. 6. Submit property guarantee (House valuation, tax receipt).
14
Chapter 4
FINANCIAL STATEMENT
Cost Sheet Of Project
Financial Details Of Project
Monthly Working Capital
Annual Expenses
Expenditure for five years
Revenue for the projected period
EMI And Repayment Of Loan Depreciation Schedules
Profit and Loss
Cash Flow Statement
Balance Sheet
15
COST SHEET A documents that reflects the Cost of the items and services required by a particular Projects or department for the performance of its business purposes. For example a departmental cost sheet may include material cost, labour cost and overhead cost incurred over a given time frame by a department and it there for provide a record of cost that are chargeable to that department.
S/R
PARTICULARS
AMOUNT IN INR
1
EQUEPMENT COST: DPRS (dual multi press) DBTC (Bicep/triceps) DCLP (leg press) DLAT (back) DPEC (Pec Dec/rear Delt)
208000 185000 212000 197000 188000
SSM350G (Outer balance Smith machine) GDCC200 (functional Trainer) GVKR82 (virtual knee Raise /chain) Dumbbells 2
FURNITURE COST: Reception table Sofa Lockers
TOTAL AMOUNT
228000 127000 30000 15000
1390000
20000 22000 18000
60000
3
COMPUTER AND PRINTER COST
50000
4
50000
5
ELECTRICITY FITTING AND LIGHTING COST DEPOSITE
6
WORKING CAPITAL
175000
7
PRELIMENERY EXPENSES
50000
8
TOTAL
2075000
300000
16
FINACIAL DETAILS OF THE PROJECT:
FINANCIAL DETAILS OF THE PROJECT
SERIAL NO.
PARTICULARS
AMOUNT
A
BANK FINANCE (70%)
1452500
B
OWN CONTRIBUTION
622500
(30%) TOTAL
COST
OF
2075000
PROJECT
financial statement
[VALUE] own contribution(30%) bank finance(70%)
[VALUE]
Interpretation:
1. The cost of the equipment and machines has been taken from a supplier of sporting goods and manufacturers of health and athletic equipment (body solid). Its E-mail is (
[email protected]) 2. The cost of furniture has been taken on the basis of research and discussion with experts. 3. The currency unit of the project has been taken in INR. 17
MONTHLY WORKING CAPITAL S/R
PARTICULARS
AMOUNT
AM OUN T
1
SALARIES: Manager
20000*1
20000
Accountant
15000*1
15000
Trainers
12000*4
48000
Cleaner
4000*2
8000
Security guard
5000*2
10000
2
RENT
50500
3
Electricity expenses
6000
4
Phone expenses
2000
5
Advertisement expenses
5500
6
Repair and maintenance
5000
7
Stationary
3000
8
Other expenses
2000
Total
175000
9
Interpretation:
Working capital is the amount which are required for the running of daily business. Running business required different kind of monthly expenses in kind of salaries given to the manpower and other indirect expenses like rent expenses , electricity expenses, phone expenses, advertisement expenses and so on. So in the current business also incurred same kind of expenses monthly wise. 18
ANNUAL EXPENSE
S/N
AMOUNT
AMOUNT
Manager
20000*1*12
240000
Accountant
15000*1*12
180000
Trainers Cleaner
12000*4*12 4000*2*12
576000 96000
Security guard
10000*2*12
120000
2
RENT
50500*12
606000
3
Electricity expenses
6000*12
72000
4
Phone expenses
2000*12
24000
5
Advertisement expenses
5500*12
66000
6
Repair and maintenance
5000*12
60000
7
Stationary
3000*12
36000
8
Other expenses
2000*12
24000
9
Total
1
PARTICULAR SALARIES:
2100000
Interpretation: As I mention before that the business has to incurred different sort of expenses for surviving business ,as without expenses incurred by the business , the operation of the organization cannot run smoothly. With help of expenses they can bring good image of the business like bringing new machinery , advertisement expenses…and so on So above table show the annual expenses of the organization Rent exp : (50500*12= 606000) electricity exp : (6000*12= 72000) phone exp: (2000*12= 24000)
19
EXPENSES FOR FIVE YEARS ROJECTED PRIOD
YEAR
PERCENTAGE
AMONT CHANGED (RS)
AMOUNT (RS)
CHANGED (%)
1
-
-
2100000
2
3%
63000
2163000
3
5%
108150
2271150
4
7%
158980
2430131
5
10%
243013
2673144
TOTAL
11637425
Interpretation:
as we know that cash is the blood of the business, without having cash no businessman can run business in their desire manner . sometime they may earn the money and sometime they have expense which may business require. So the above table showing the expenses for the five projected year , in which in every year the expenses has increasing with the getting of increasing the members and obtain or purchasing the new machinery or equipments for the business.
20
ANNUAL EXPENSES
ANNUAL EXPENSES
10%
9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1234
Interpretation:
the above graph is the graph of annual expenses of five projected year in which the expenses of every year going increasing due to certain factors like hiring of staffing , purchasing of equipments and as well as the machinery.
21
Revenue for the projected period PARTICULARS
YESR 1ST
2
ND YEAR
rd
3
YEAR
4 thYEAR
5
TH
YEAR
Revenue from fees (as per schedule 1) Revenue
1080000
1134000
1213380
1334718
1494884
1800000
1890000
2022300
2224530
2491474
540000
567000
606690
667359
747442
3420000
3591000
3842370
4226607
4733800
from
personal training (as per schedule 2) Revenue from yoga classes (as per schedule 3)
Total
Interpretation: Every business is existing for their own predetermined objectives , which they want achieve in desired manner which are called revenue. The above table is about projected revenue for five years.
The above table showing that the
revenue is increasing year by year….following table showing the more interpretation.
Schedule 1 Calculation of revenue from member’s fees:
Numbers of members will be initially low but as soon as it continues to provide good service to members, the members will increase is short time. Total revenue form fees for first year: 90*1000*12 =1080000 Note: members 90. Fees 1000.
Months 12
22
nd
rd
th
th
Following is the growth rate of revenue from fees for 2 , 3 , 4 and 5 year
year 2nd
5%
3rd year
7%
4t year
10%
th
5 year
12%
Schedule 2
Revenue from personal training for first year:
Personal trainers help members to workout properly and follow a specific routine. In first year there will be 30 members having personal training and the price for personal training will be 5000 per month. Total revenue from personal training for first year: 30*5000*12 Note: members 30. Fees 5000. Months 12.
23
nd
rd
th
th
Following is the growth rate of revenue from fees for 2 , 3 , 4 and 5 year
year 2nd
5%
3rd year
7%
4t year
10%
th
12%
5 year
Schedule 3 Revenue from yoga classes:
There will be one class of yoga every month in the morning in which there will be 15 members in class the fees of yoga will be charge 3000 per month per member as follow: Total revenue from yoga classes for first year: 15*3000*12 Note: members 15.
Fees 3000.
Months 12.
24
nd
rd
th
th
Following is the growth rate of revenue from fees for 2 , 3 , 4 and 5 year
year 2nd
5%
3rd year
7%
4t year
10%
th
5 year
12%
25
CALCULATION OF INTEREST AND INSTALLMENT OF BANK LOAN: 1ST YEAR YEAR
1
MONT
EMI I NTRES PR INCIPL CL OSING BALANC
1
34175
17551
16624
1435876
2
34175
17350
16825
1419052
3
34175
17147
17028
1402024
4
34175
16941
17234
1384790
5
34175
16733
17442
1367348
6
34175
16522
17653
1349695
7
34175
16309
17866
1331829
8
34175
16093
18082
1313747
9
34175
15874
18300
1295447
10
34175
15653
18522
1276925
11
34175
15430
18745
1258180
12
34175
15203
18972
1239208
TOTAL
41098
196806
213292
26
CALCULATION OF INTEREST AND INSTALLMENT OF BANK LOAN: 2nd YEAR
YEAR
MONTH
EMI
INTREST
PRINCIPLE
CLOSING BALANCE
2
1
34175
14974
19201
1220007
2
34175
14742
19433
1200574
3
34175
14507
19668
1180906
4
34175
14269
19906
1161001
5
34175
14029
20146
1140855
6
34175
13785
20390
1120465
7
34175
13539
20636
1099829
8
34175
13290
20885
1078944
9
34175
13037
21138
1057806
10
34175
12782
21393
1036413
11
34175
12523
21651
1014762
12
34175
12262
21913
992849
TOTAL
410098
163738
246360
27
CALCULATION OF INTEREST AND INSTALLMENT OF BANK LOAN: 3rd YEAR
YEAR
MONTH
EMI
INTREST
PRINCIPLE CLOSING BALANCE
1
34175
11997
22178
970671
2
34175
11729
22446
948225
3
34175
11458
22717
925508
4
34175
11183
22992
902516
5
34175
10905
23269
879247
6
34175
10624
23551
855696
7
34175
10340
23835
831861
8
34175
10052
24123
807738
9
34175
9760
24415
783323
10
34175
9465
24710
758614
11
34175
9167
25008
733605
12
34175
8864
25310
708295
TOTAL
410098
125544
284554
3
28
CALCULATION OF INTEREST AND INSTALLMENT OF BANK LOAN: 4th year YEAR
MONTH
EMI
INTREST
PRINCIPLE
CLOSING BALANCE
4
1
34175
8559
25616
682679
2
34175
8249
25926
656753
3
34175
7936
26239
630514
4
34175
7619
26556
603958
5
34175
7298
26877
577081
6
34175
6973
27202
549879
7
34175
6644
27530
522349
8
34175
6312
27863
494485
9
34175
5975
28200
466286
10
34175
5634
28541
437745
11
34175
5289
28885
408860
12
34175
4940
29234
379625
Total
410098
81428
328670
29
CALCULATION OF INTEREST AND INSTALLMENT OF BANK LOAN: 5th year
YEAR
5
MONTH
EMI
INTREST
PRINCIPLE
CLOSING BALANCE
1
34175
4587
29588
350038
2
34175
4230
29945
320092
3
34175
3868
30307
289785
4
34175
3502
30673
259112
5
34175
3131
31044
228068
6
34175
2756
31419
196649
7
34175
2376
31799
164850
8
34175
1992
32183
132668
9
34175
1603
32572
100096
10
34175
1209
32965
67130
11
34175
811
33364
33767
12
34175
408
33767
0
Total
410098
30474
379624
Interpretation: establishing business wants money , without which there is no possibility of running business or achieving the objectives. So they obtain the money from the financial institutions in terms of banks. Banks are the financial institution which are giving the loan for the business for certain time and charging them the interest, and the businessman has to pay bank in the mention time. So likewise in this business got the loan from the bank and now calculate the interest and installment payment to the bank for the five years.
30
CALCLATION OF DEPRECIATION ON ASSET a) Depreciation on equipment
Year
Opening
Depreciation
Closing
balance
at 10%
balance
1
1390000
139000
1251000
2
1251000
125100
1125900
3
1125900
112590
1013310
4
1013310
101331
911979
5
911979
91198
820781
b) Depreciation on furniture year
Opening balance
Depreciation
Closing
at 10%
balance
1
60000
6000
54000
2
54000
5400
48600
3
48600
4860
43740
4
43740
4375
39366
5
39366
3937
35429
31
a) Depreciation on computers year
Opening balance
Depreciation at 30%
Closing balance
1
50000
15000
35000
2
35000
10500
24500
3
24500
7350
17150
4
17150
5145
12105
5
12105
3632
8474
Depreciation of electrical fitting
year
Opening balance
Depreciation at 10%
Closing balance
1
50000
5000
5000
2
45000
4500
40500
3 4
40500 36450
4050 3645
36450 32805
5
32805
3181
29524
Interpretation: When the company use the assets like machinery, equipments
and so on , with passage of time their value become decreasing, this decreasing of value is called depreciation. Now we are going to calculate the depreciation as 10% as following equipment: (srcinal value- 10% dep value= current value)(1390000 – 139000 = 1251000) furniture: (srcinal value – 10% dep value= current value)(60000-6000 = 54000) computers: (srcinal value- 30% dep value= current value)(50000 – 15000 =35000) Electrical fitting: (srcinal value – 10% dep value =current value)
32
Profitability statement
st
2
nd
rd
th
year 3 year 4 year
5
th
Particular
1 year
year
Revenue:
3420000 3591000 3842370 4226607 4733800 2100000 2163000 2271150 2430130 2673143
Less: Expenditure Profit before tax, interest and depreciati
1320000 1428000 1561220 1796477 2060657
Less:
10000
Preliminary expenses Profit before tax, interest and depreciati
1310000 1418000 1561220 1786477 2050657
10000
10000
10000
10000
Less: Depreciation Profit before tax and interest
165000
145500
128850
114496
101948
1145000 1272500 1432370 1671981 1948709
Less: Interest Profit before tax
196806
163738
125544
81428
30474
948194
1108762 1306826 1590553 1918235
284458
332829
392048
477166
663736
775933
914778
1113387 1342765
Less: Tax Net surplus/net profit
575470
33
Interpretation:
As I said before every businessman having interest to bring or obtain the profit from their business. The above table showing the calculation of the profitability of the business in sequence. Net profit =( Revenue – expenditure = PBITD - Depreciation = PBIT – Interest =pbt tax= net ) Net profit =(3420000 – 2110000 = 1310000 – 165000 = 1145000 – 196806 = 948194 284458=663736) the above table showing that there is increasing in the profitability year by year
Net profit 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 1styear
2ndyear
3ndyear
4thyear
5thyear
34
Cash flow statement for the projected period
Cash inflow
st 1year
n
Opening balance
-
800444
1485517
2254591
3163804
Revenue
3420000
3591000
3842370
4226607
4733800
Own capital
622500
-
-
-
-
Bank loan
1452500
-
-
-
-
Total
5495000
4388444
5327887
6481198
7897604
Expenditure
2100000
2163000
2271150
2430130
2673144
EMI
410098
410098
410098
410098
410098
Tax
284458
332829
392048
477166
575470
Fixed asset
1550000
-
-
-
-
Deposit
300000
-
-
-
-
Preliminary expenses
50000
-
-
-
-
Total
469456
2905927
3073296
3317394
3658711
Closing balance of cash (A-B)
800444
1485517
2254591
3163804
4238893
2
year
3 ryear
4 tyear
t
5
year
Cash outflow
Interpretation:
cash is blood of the business , without cash no one can run their business as human being can not alive without blood. So in the business sometimes money comes to the business in terms of revenue, incomes, debtors,loans, this coming money to the business is called cash inflow. And sometimes money goest out from the business is called cash outflow. Thus the coming and going money from the business is called cash flow. Cash outflow is in terms of expenditure creditors, tax,and deposit and so on.
35
Cash in hand 4500000
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0 1styear
2ndyear
3rdyear
4rdyear
5thyear
Interpretation:
The above graph showing that , there is cash inflow is better than cash outflow which called cash in hand. Cash in hand is increasing year by year in the above graph means that the business is in greater position.
36
Balance sheet LIABILITY
1stYEAR
Own capital
622500
622500
622500
622500
622500
Bank loan
1239208
992848
708294
379624
0
Surplus /revenue
663736
1439669
2354447
3467834
4810599
Total
2525444
3055017
3685241
4469958
5433099
Asset
st 1year
Fixed asset
1385000
1239500
1110650
996154
894206
Cash in hand /current asset
800444
1485517
2254591
3163804
4238893
Deposit
300000
300000
300000
300000
300000
Preliminary expenses
40000
30000
20000
10000
0
Total
25251444
3055017
3685241
4469958
5433099
2
nd
YEAR
n 2 year
3 rdYEAR
r 3 year
4 thYEAR
t 4 year
5
th
t
5
YEAR
year
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Chapter 5 RATIO ANALYSIS
Debt-Equity Ratio
Fixed Asset To Current Asset
Proprietary Ratio
Total Asset Turnover ratio
Return on total assets
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DEBT-EQUITY RATIO Debt/Equity Ratio is a debtratio used to measure a company's financial leverage, calculated by dividing a company’s total liabilities by its stockholders'equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity.
Debt-equity Ratio= Long-term debt/shareholder’s fund
1st year= 1239208/622500= 1.99 2nd year= 992848/622500= 1.59 3rd year= 708294/622500= 1.13 4th year= 379624/622500= 5th year= 0
DEBT-EQUITY RATIO 1400000
1200000
1000000
800000
600000
400000
200000
0 YEAR1
YEAR2
YEAR3
YEAR4
YEAR5
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FIXED ASSETS TO CURRENT ASSETS RATIO The fixed-asset turnover ratio is, in general, used by analysts to measure operating performance. It is a ratio of net sales to fixed assets. This ratio specifically measures how able a company is to generate net sales from fixed-asset investments, namely property, plant and equipment (PP&E), net of depreciation. In a general sense, a higher fixedasset turnover ratio indicates that a company has more effectively utilized investment in fixed assets to generate revenue. Fixed Assets to Current Assets Ratio= fixed assets/CA
1st Year = 1385000/800444= 1.73times 2nd Year =1239500/1485517= 0.83times 3rd Year =1110650/2254591= 0.49 times 4th Year = 996154/3163804= 0.31times 5th Year = 894206/4238893= 0.21times
4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 YEAR1
FIXED CURRENT ASSETS YEAR 2 ASSETS YEAR3 YEAR4
YEAR5
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PROPRIETARY RATIO Proprietary ratio (also known as Equity Ratio or Net worth to total assets or shareholder equity to total equity). Establishes relationship between proprietor's funds to total resources of the unit. Where proprietor's funds refer to Equity share capital and Reserves, surpluses and Tot resources refer to total assets.
Proprietary Ratio= Total Assets/Owner’s fund 1st Year=2525444/622500= 4.05 2nd Year= 3055017/622500 =4.90 3rd Year= 3685241/622500= 5.92 4th Year= 4469958/622500= 7.18 5th Year= 5433099/622500= 8.72
6000000
5000000
4000000
3000000
2000000
1000000
0 YEAR 1
YEAR 2
YEAR 3
TOTAL ASSETS
YEAR 4
YEAR 5
OWNERS FUND
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TOTAL ASSETS TURNOVER RATIO Asset turnover ratio is the ratio of the value of a company’s sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.
Total assets turnover ratio= Net sales/total assets
1st Year= 3420000/2525444= 1.35 2nd Year= 3591000/3055017= 1.17 3rd Year= 3842370/3685241= 1.04 4th Year= 4226607/4469958= 0.94 5th Year= 4733800/5433099= 0.87
6000000
5000000
4000000
3000000
2000000
1000000
0 YEAR1
YEAR2 NET SALES
YEAR3
YEAR4
YEAR5
TOTAL ASSETS
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RETURN ON TOTAL ASSETS
the return on total assets (ROTA) is a ratio that measures a company's earnings before interest and taxes (EBIT) against its total net assets.
Return on total assets= Net profit/total assets st
1 Year= 663736/2525444= 0.25 nd
2 Year= 775923/3055017= 0.248 rd
3 Year= 914778/3685241= 0.248 th
4 Year= 1113387/4469958= 0.249 th
5 Year= 1342765/5433099= 247
5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 YEAR1
YEAR2 NET PROFIT
YEAR3
YEAR4
YEAR5
TOTAL ASSETS
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LIMITATIONS 1. Error can be done due to projections.
Error can be done while preparing projected balance sheet and other statements and also when calculations & projections are done on it. 2. Perfection is impossible.
Perfection is impossible because it is not possible that the firm can get desired projections or the projections made in projected statements. The srcinal profit and other expenses, gains & losses are higher or lower than that of projected projections. The proposed plant is a new enterprise. So, there is no previous year balance sheet & other statements.
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CONCLUSION From the above project I conclude that all the calculation made in the financial statements are made on assumptions. This project has given me a depth knowledge of analysis of financial statements which is my special subject. It has also helped to enhance knowledge of my other subjects also. This project has helped me to bridge the gap between my theoretical and practical knowledge. During the project I have gotten the knowledge of real experience in a business and make the confident to have all the information regarding the financial information of a company and business and come to know of analyzing the profit and loss of a company.
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Findings 1. There are many banks available in India who provide finance for the newly established business such as The Muslim Cooperative Bank, SBI and HDFC bank 2. The documents required for taking financing loan at a business are as follows: 3. Interest rates for taking loan from The Muslim Cooperative bank is 14% p.a. 4. To start a business an entrepreneur is required projected financial statement different ratio evaluation feasibility study at the project. 5. Time required to credit the loan. 6. After getting loan entrepreneur can practically implement their projections.
Bibliography
1. www.mfg.com 2. References 3. Previous years project
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