FINANCIAL ANALYSIS OF CAMPCO LIMITED

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF

THE DEGREE OF

BACHELOR IN COMMERCE (ACCOUNTING AND FINANCE)

UNDER THE FACULTY OF COMMERCE

BY

ANJANA A. RAVINDRAN

UNDER THE GUIDANCE OF

PROF. NITIN PAWAR

PARLE TILAK VIDYALAYA’S ASSOCIATION’S

MULUND COLLEGE OF COMMERCE, MULUND SN RD,

NEAR COURT, MULUND WEST, MUMBAI,

MAHARASHTRA 400080
 FINANCIAL ANALYSIS OF CAMPCO LIMITED

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF

THE DEGREE OF

BACHELOR IN COMMERCE (ACCOUNTING AND FINANCE)

UNDER THE FACULTY OF COMMERCE

BY

ANJANA A. RAVINDRAN

UNDER THE GUIDANCE OF

PROF. NITIN PAWAR

PARLE TILAK VIDYALAYA’S ASSOCIATION’S

MULUND COLLEGE OF COMMERCE, MULUND SN RD,

NEAR COURT, MULUND WEST, MUMBAI,

MAHARASHTRA 400080
 DECLARATION

I the undersigned MISS ANJANA A. RAVINDRAN here by, declare that the work
embodied in this project work titled a study on the “FINANCIAL ALAYSIS OF
CAMPCO LIMITED”, forms my own contribution to the research work carried out
under the guidance of PROF.NITIN PAWAR. This is a result of my own research
work and has not been previously submitted to any other University for any other
Degree/ Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

ANJANA A. RAVINDRAN

Certified by

PROF. NITIN PAWAR

 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, DR. SONALI PEDNEKAR for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator MRS. SHILPA THAKUR, for her
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof.
NITIN PAWAR whose guidance and care made the project successful. I would like to
thank my College Library, for having provided various reference books and magazines
related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially My Parents and Peers who supported
me throughout my project.
 INDEX

CHAPTER CONTENTS PAGE NO.

CHAPTER-1 INTRODUCTION 1
1.1 Meaning
1.2 Industry Profile
1.2.1 History
1.2.2 Market capitalization
1.2.3 Size of the Industry
1.2.4 Major Players
1.2.5 Latest Development
1.3 Company profile
1.3.1 History
1.3.2 Vision Statement
1.3.3 Mission Statement
1.3.4 Quality policy
1.3.5 Objectives of
CAMPCO Ltd
1.3.6 Profile of CAMPCO Ltd
1.3.7 Area of Operation
1.3.8 Research and
Development
1.3.9 Achievements and
Awards
CHAPTER-2 RESEARCH 19
METHODOLOGY
2.1 Objectives of the study
2.2 Scope of the Study
2.3 Limitation of the study
2.4 Tools of Financial Analysis
2.4.1 Comparative financial
Statements
2.4.2 Size statements
common
2.4.3 Trend Analysis
2.4.4 Ratio Analysis
2.5 Financial Statement Analysis
2.6 Limitations of Financial
Statement Analysis
2.7 Statements of the problem
2.8 Method of Data collection Tools of data
 Collection
CHAPTER-3 LITERATURE REVIEW 33
CHAPTER-4 DATA ANALYSIS, 37
INTERPRETATION ,
PRESENTATION
4.1 Data Analysis and
Interpretation
4.2 Ratio Analysis
4.2.1 Liquidity ratio
4.2.2 Leverage ratio
4.3 Comparative Balance Sheet
4.4 Comparative Profit And Loss
Account
4.5 Trend Analysis
CHAPTER-5 CONCLUSION AND 77
SUGGESTIONS
5.1 Findings
5.2 Suggestions
5.3 Conclusions
 FINANCIAL ANALYSIS OF CAMPCO LTD.

CHAPTER 1: INTRODUCTION

1.1 Meaning

Business firms are existing in a world of rapid changes and extensive interactions which
necessitated radical reforms especially in the field of financial management. Finance is
said to be the circulating system of an enterprise making possible the need for co-
operation between diverse activities. It plays an extremely crucial role in the continuity
and growth of the business.

The proper financing of an enterprise and the skillful management of its assets are
crucial to the continued success of the firm. Careful management of a firm's assets and
financial resources is important for its success in a free market economy.

A financial statement is a collection of data organized according to logical and

consistent accounting procedures. Its purpose is to convey an understanding some
financial aspect of a business firm. It may show position at a moment in time, as in
time, as in the case of a balance sheet or may reveal a serious of activities over a given
period of time, as in the case of income statement. Thus the analysis of financial
statement enables to forecast and prepare budget of an organization in investment
decision and dividend policy decision. The basis for financial analysis is financial
information of an enterprise, contains financial statement or accounting reports.

Financial analysis is the process of evaluating businesses, projects, budgets, and other
finance-related transactions to determine their performance and suitability. Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid, or
profitable enough to warrant a monetary investment. One of the most common ways to
analyze financial data is to calculate ratios from the data in the financial statements to
compare against those of other companies or against the company's own historical
performance.

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It is performed by professionals who prepare reports using ratios that make use of
information taken from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making business decisions. Based
on the reports, management may:

• Continue or discontinue its main operation or part of its business.

• Make or purchase certain materials in the manufacture of its product.

• Acquire or rent/lease certain machineries and equipments in the production of

Its goods.

• Issue stocks or negotiate for a bank loan to increase its working capital.

• Make decisions regarding investing or lending capital

FEATURES OF FINANCIAL STATEMENT

 Financial statements are historical in nature since they always present the past
performance. Hence, they do not carry the futuristic approach.
 Financial statements are always prepared for a certain period of time. They
generally cover the period of one year. Financial Statements are prepared at the
end of the accounting period.
 Financial statement should be prepared and presented at right time. Undue
delay in the preparation would reduce the significance and utility of this
statement.
 Financial statement must have general acceptability and understanding. Theses
can achieve only by applying certain generally accepted accounting principles
in their preparation.
 Financial statement should not be affected by inconsistence arising out of
personal judgment and procedural choices exercised by the accountant.
 They should be prepared in a classified form so that a better and meaningful

2
 analysis could be made.
 They should be easily comparable with previous statement or those of similar
concern and industry. Comparability increases the utility of financial statement.

PROCEDURE OF FINANCIAL STATEMENT ANALYSIS:

The following procedure is adopted for the analysis and interpretation of financial

Statements:-

 The analyst should know the plans and policies of the managements that he may
be able to find out whether these plans are properly executed or not.
 The financial data be given in statement should be recognized and rearranged.
It will involve grouping the similar data under some heads. Breaking down of
Individual components of the statement according to nature. A relationship is
established among financial statements with the help of tools and techniques of
Analysis such as ratios, trends, common size, and fund flow, etc.
 The conclusion drawn from the interpretation is presented to the management
in the form of the report.
Analyzing financial statement involves evaluating three characteristics of the
company:
its liquidity
its profitability
its insolvency.
A short-term creditor, such as a bank, is primarily interested in the liquidity. A
long-term creditor such as a bondholder, however, looks to profitability and
solvency measures that indicate the company’s ability to survive over a long
period of time
 The information is interpreted in a simple and understandable way. The
Significance and utility of financial data is explained which help in decision
Making.

3
  The extent of analysis should determine so that the sphere of work may be
Decided .If the aim is find out, Earning capacity of the enterprise then analysis
of Income statement will be undertaken. On the other hand, if financial position
is to be studied then balance sheet analysis will be necessary.

1.2 INDUSTRY PROFILE

Indian Chocolate Industry as today is dominated by two companies, both

multinationals. The market leader is Cadbury with a lion's share of 70%. The company's
brands like Five Star, Gems, Éclairs, Perk, Dairy Milk are leaders in their segments.
Until early 90's, Cadbury had a market share of over 80 %, but its party was spoiled
when Nestle appeared on the scene. The other one has introduced its international
brands in the country (Kit Kat, Lions), and now commands approximately 15% market
share. The two companies operating in the segment are Gujarat Co-operative Milk
Marketing Federation (GCMMF) and Central Arecanut and Cocoa Manufactures and
Processors Co-operation (CAMPCO). Competition in the segment will soon get keener
as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian
chocolate pie.

The UK based confectionery giant, Cadbury is a dominant player in the Indian

chocolate market and the company expects the energy glucose variant of its popular
Perk brand to be singularly responsible for adding five per cent annually to the size of
the company’s market share.

1.2.1 History

The Indian Chocolate Industry has come a long way since long years. Ever since 1947
the Cadbury is in India, Cadbury chocolates have ruled the hearts of Indians with their
fabulous taste. Indian Chocolate Industry Cadbury Company today employs nearly
2000 people across India. The company is one of the oldest and strongest players in the

4
Indian confectionary industry with an estimated 68% value share and 62% volume
share of the total chocolate market. It has exhibited continuously strong revenue growth
of 34% and net profit growth of 24% throughout the 1990s.

The brand of Cadbury is known for its exceptional capabilities in product innovation,
distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bourn vita,
Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering
to suit all occasions and moods.

Today, the company reaches millions of loyal customers through a distribution network
of 5.5 lakhs outlets across the country and this number is increasing every day. In 1946
the Cadburys manufacturing operations started in Mumbai, which was subsequently
transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a
view to promote modern methods as well as improve milk yield. In 1981-82, a new
chocolate manufacturing unit was set up in the same location in Talegaon. The
company, way back in 1964, pioneered cocoa farming in India to reduce dependence
on imported cocoa beans. The parent company provided cocoa seeds and clonal
materials free of cost for the first 8 years of operations. Cocoa farming is done in
Karnataka, Kerala and Tamil Nadu. In 1977, the company also took steps to promote
higher production of milk by setting up a subsidiary Induri Farms Ltd., near Pune.

In 1989, the company set up a new plant at Malanpur, MP, to derive benefits available
to the backward area. In 1995, Cadbury expanded Malanpur plant in a major way. The
Malanpur plant has modernized facilities for Gems, Éclairs, and Perk etc. Cadbury
operates as the third party operations at Phalton, Warana and Nashik in Maharashtra.
These factories churn out close to 8,000 tonnes of chocolate annually.

In response to rising demand in the chocolate industry and reduce dependency on

imports, Indian cocoa producers have planned to increase domestic cocoa production
by 60% in the next four years. The Indian market is thought to be worth some 15bn
rupee (?0.25bn) and has been hailed as offering great potential for Western chocolate
manufacturers as the market is still in its early stages.

Chocolate consumption is gaining popularity in India due to increasing prosperity

coupled with a shift in food habits, pushing up the country's cocoa imports.

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1.2.2 MARKET CAPITALIZATION

The Indian candy market is currently valued at around $664 million, with about 70%
share ($ 461 million) in sugar confectionery and the remaining 30% ($ 203 million) in
chocolate confectionery. Indian Chocolate Industry is estimated at US$ 400 million and
growing at 18% per annum. Cadbury has over 70 % share in this market, and recorded
a turnover of over US$ 37m in 2008.

India emerged as one of the fastest growing markets in the world for chocolate in recent
years, with a total market size of over 112.5 million Indian rupees in 2016. Although
the production and consumption of chocolate was growing steadily each year, only a
handful of companies ruled the sector. Mondelez – earlier known as Cadbury in India,
had consistently been the country’s largest chocolate-maker since the 1990s. In 2016,
it held the largest share of the country’s chocolate confectionery market with around 49
percent. This was much higher compared to the other global giant in the food and
beverages industry – Nestle, at around 13 percent of the market share.

In India, the cocoa crop had been grown commercially only since the 1970s and even
then, it is grown primarily as an intercrop since it requires plenty of shade and a specific
tropical climate. The country produced over 147.3 thousand metric tons of chocolate
and cocoa powder during fiscal year 2016, out of which Andhra Pradesh produced over
7,000 metric tons of cocoa, followed by Kerala at 6,500 metric tons. That same year,
the worldwide estimates of coca production amounted to approximately 3.97 million
tons.

1.2.3 SIZE OF THE INDUSTRY

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The size of the market for chocolates in India was estimated at 30,000 tones in 2008.
Bars of molded chocolates like amul, milk chocolate, dairy milk, truffle, nestle
premium, and nestle milky bar comprise the largest segment, accounting for 37% of the
total market in terms of volume. The chocolate market in India has a production volume
of 30,800 tones. The chocolate segment is characterized by high volumes, huge
expenses on advertising, low margins, and price sensitivity. The count segment is the
next biggest segment, accounting for 30% of the total chocolate market. The count
segment has been growing at a faster pace during the last three years driven by growth
in perk and kitkat volumes. Wafer chocolates such as kitkat and perk also belong to this
segment. Panned chocolates accounts for 10% of the total market. The chocolate market
today is primarily dominated by Cadbury and Nestle, together accounting for 90% of
the market.

1.2.4 MAJOR PLAYERS

• Cadburys India Limited

• Nestle India

• Gujarat Co-operative Milk Marketing Federation

• Cocoa Manufactures and Processors Co-operative (CAMPCO)

• Bars Count Lines Wafer Panned Premium

• Cadburys Dairy Milk & Variants

• 5-Star, Milk

• Amul Milk Chocolate

• Treat Perk Gems,

• Tiffins Temptation & Celebrations

7
• Nestle Milky Bar & Bar One.

1.2.5 LATEST DEVELOPMENTS

• Chocolate-lovers may soon find their chocolate dearer if the problems plaguing
the industry continue. Raw material costs have risen by more than 20 % in the last few
years. Although retail prices have not increased, a rise in input costs will force the
manufacturers to consider a price hike. The Bigger players in the country such as
Cadbury, which leads the Rs 2,500 crores chocolate markets in India with a share of
72%, will find it easier to absorb the surge in input costs as it has products at various
price points in the market, said industry experts. Cadbury may also opt for a price hike,
albeit marginal, if the current trend continues. Indian Chocolate Industry’s Margin
range between 10 and 20%, depending on the price point at which the product is placed.
The input costs in India are under check owing to the 24% decline in the prices of sugar.

• The World’s Leading manufacturer of high quality cocoa and chocolate

products Barry Callebaut, has announced the opening of its first, state-of the art,
Chocolate Academy in Mumbai, India in July 2007.

• According to the analysis of the international market intelligence provider Euro

monitor, the relatively small Indian chocolate market with volumes of about 55,000
metric tonnes of chocolate and compound per year is expected to grow on average per
year by around 17.8% between 2008 and 2012.

• Ferrero the Italian confectionery giant of $8 billion has planned up for a new
production facility in Maharashtra with an investment of over $125 million to whip up
some of its popular brands that include Rocher and Kinder.

1.3 COMPANY PROFILE

8
The Central Arecanut and Cocoa Marketing and Processing Co- operative Limited or
CAMPCO was found on 11 July 1973 at Mangalore. The organisation working on
principles of co-operative was found to mitigate the sufferings of arecanut and cocoa
growers in Indian states of Karnataka and Kerala. The CAMPCO has now extended
its services to other states of India like Assam and Goa also. The CAMPCO has now
become multi state co-operative under relevant Indian laws. The organisation is mainly
into procurement, marketing, selling and processing of arecanut and cocoa. The
company also provides guidance for farmers for growing arecanut and cocoa. The
company plans to enter into natural rubber business also.

The company has set up a chocolate manufacturing plant in 1986 at Puttur of Dakshina
Kannada district of Karnataka. The plant produces chocolates and other products of
cocoa both under its own brand and also for Nestle. The company plans to increase
production of choco chips by setting up of new plant.

1.3.1 HISTORY

Areca nut is an important commercial crop in India and finds a place in all religious,
social and cultural functions in India. Cultivation of Arecanut is mostly confined to
States of Karnataka, Kerala and Assam, but the consumption is spread all over the
country. India is considered as the largest Arecanut producing country in the world. The
total acreage under cultivation is 264000 hectares and the annual production estimated
at 313000 metric tons with Karnataka and Kerala accounting for nearly 72 percent of
total production. Over six million people are engaged in arecanut cultivation,

processing and trade. More than 85 percent of the area under cultivation is made up of
small and marginal holdings.

A sudden marketing crisis in the year 1970-71, when prices registered a marked fall
which caused considerable concern to the growers, was the genesis for the setting up of

9
this Co-operative Venture (what popularly is called The CAMPCO). Growers had been
thrown into panic with the prices coming down by half of what was prevailing till 1970-
71 season.

Various measures were thought of for organized marketing management and leaders
among growers sat together to find a way out. State Government of Karnataka, on the
advice of an Expert Committee, recommended organizing a Central Agency in the
Public or Co-operative sector. With the blessings and active support extended by the
State Governments of Karnataka and Kerala, the CAMPCO was registered on 11 July
1973 under sec.7 of the Karnataka Co-operative Societies Act read with sec.4(2)of the
Multi State Co-operative Societies Act 1984. AMPCO has its head office
at Mangalore and its Branches spread all over India.

The company set up a chocolate manufacturing plant in 1986 at Puttur of Dakshina

Kannada district of Karnataka. The Campco chocolate manufacturing unit was
inaugurated on 1 September 1986 by then Indian President Giana Zail Singh. The
inauguration ceremony was broadcast live on Doordarshan. The plant produces
chocolates and other products of cocoa both under its own brand and also for Nestle. In
2016 total production was 18,000 tonnes per annum, with a planned expansion to
increase the output to 23,000 tonnes. A similar expansion had also been planned in
2011. The turnover of Campco was a record high of Rs 17400 Million in FY2018-
19. The Campco chocolate factory has build up with new amenity block which was
inaugurated by Honorable union minister for commerce and industry Sri. Suresh Prabhu
on 21 January 2018. On the same day, the "statue of campco founder president Late Sri.
Varanashi Subraya Bhat" was also inaugurated. This statue is the main attraction and
also the crown for campco. Well setup office along with well equipped production entry
area with fulfilling food safety norms, which comply FSSAI, ISO, OHSAS and HALAL
certifications.

Through perseverant efforts of far sighted, dedicated and resourceful leaders, with the
cooperation and assistance of equally dedicated growers under the guidance of the State
Governments of Karnataka and Kerala, this institution took giant strides forward and
has turned into a tower of strength to the areca growing community in the country.

10
1.3.2 VISION STATEMENT

“CAMPCO is formed to help the farmers, procuring more and more arecanut and cocoa,
and then utilizing these materials in a better way which will help the farmers to get
market for their products”

1.3.2 MISSION STATEMENT

“Co-operation between people harmony between faith…may the fragrance of peace

prevails forever”

1.3.4 QUALITY POLICY

“HACCP” (Hazard analysis and critical control points) is quality policy, which is used
for food safety. Food safety is the top concern among food products for every good
reason. It is critical for cooperative survival and success. If there is a significant safety
failure excellence in other areas of corporate management will be wiped and companies
will loss on.

1.3.5 OBJECTIVES OF CAMPCO

The CAMPCO has been functioning effectively with the main objectives of;

11
• Procuring Arecanut and Cocoa grown by member cultivators and if necessary,
from other growers on an agency basis or on outright purchase basis

• Sale of Arecanut and Cocoa and their products to the best advantage of members
and also to advance loans to members on the pledge of goods and to do all other things
necessary to carry out the objective.

• To promote and develop Areca and Cocoa cultivation, marketing and

processing.

The area of operation of this co-operative for procurement and processing of Arecanut
and Cocoa extends to the States of Karnataka and Kerala, but for the
marketing activity, the area has been extended to the whole country. Arecanut purchase
operations were extended to Assam, Andaman and Goa but in recent years purchase
operations in Assam had to be closed due to disturbances.

Starting with its Head office at Mangalore in coastal Karnataka, the CAMPCO began
with a handful of procurement centers in Karnataka and Kerala. The Campco adopted
a safe policy for purchasing and marketing the commodity and maintaining standards
in quality assiduously with the dedicated cooperation of a network of diligent officers
and workers. The society achieved success by leaps and bounds, stood the brunt of
changing trends, market recessions and upheavals, glut in the market and even national
calamities in the marketing field for more than two and half decades. Confidence has
gained among the growers for areca cultivation as an economically viable and
comfortable proposition.

The co-operative encouraged growers to take-up cocoa cultivation as an inter crop in

the latter half of the 1970s as a supplemental crop. This grew up to become a large scale
operation with good results. A sudden withdrawal by the buyers of cocoa from the
procurement operations due to crash in the international market came as a shock to
cultivators. Karnataka and Kerala governments enthused at this stage the CAMPCO to
enter on the scene to rescue the farmers from distress. CAMPCO willingly took up the
responsibility to enter the cocoa market and performed a savior's role. As a strategy for
survival in the international scene ‘CAMPCO’ played a major role in establishing a

12
name for Indian cocoa, which hitherto had not been achieved. It procured cocoa pods
from growers and adopting scientific processing methods to market standards, released

dry cocoa beans matching in quality in the world market to that of Ghana, Brazil and
other leading cocoa cultivating nations. With a view to creating a permanent demand
and a steady market for the beans, Campco established a chocolate manufacturing
factory at Kemminje village in Puttur Taluk in Dakshina Kannada district adopting
foreign technical collaboration in chocolate making. The factory was set up in 1986 at
an initial investment of 116.7 million and a licensing capacity to produce 8800 metric
tons. The factory also entered into technical cooperation venture with Nestle (India)
Ltd, for diversifying product brands. It has been producing a variety of products - semi
finished items like cocoa mass, cocoa butter, cocoa powder and finished products in
molded line, count line and chocolate drink etc. CAMPCO chocolate has gained
extensive market popularity in India.

1.3.4 PROFILE OF CAMPCO

13
 Full name :The Central arecanut and cocoa
marketing and
Processing cooperative limited.

Status : A Co-operative organization

registered under the multi state
co-operative societiesAct,1984

Areca of operation : Karnataka and Kerala states for

memberships. No limits for
marketing.

Main object : Procurement / Processing /

Marketing of Arecanut and cocoa
/ Cocoa products / Rubber.

Date of
Registration Business : 11/07/1973

Authorized share capital : Rs.55.00crores

Paid up share capital : Rs.35.79crores

Number of members : 129050members

Deposits : Rs.94.41crores

1.3.7 AREA OF OPERATION-Global/National/Regional

14
 The area of operation CAMPCO Ltd for procurement and processing of arecanut and
cocoa extended to the state of Karnataka and kerala, but for the marketing activities
the area has been extended to the whole country. Arecanut purchase operations were
extended to Assam, Andaman and Goa but in recent years purchase operations in
Assam had to be closed due to disturbances.

Global:

Company has been entered into global market. It export semi finished products that
is cocoa butter 60 tones over the three years period. The leading buyers are Malaysia,
Korea and USA.

National: The Company has branches throughout India.

Table 1.3.a: National area of operation

North South East West

Chandigarh Bangalore, Hubli Calcutta Ahmedabad

Jaipur Cuttack, Chennai Patna Mumbai

New Delhi, Jammu Madras, Goa Indore, Nagpur

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Regional:

The company regional office throughout Karnataka. It has both dealers and distributors.
The regional offices located at Karnataka are Mangalore, Puttur, Birur and Sullia.

Organisation and management:

The management of CAMPCO vests in the board of directors consisting of 17 directors.

These directors are elected or nominated as per the provisions of by-laws.

The day to day activities are conducted by the managing director. The executive
committee and the business committee devote more time to scrutinize and decide about
the financial and business transactions of the Institution.

Table No.1.3.b PRODUCT PROFILE OF CAMPCO

SI Chocolates SL No. Industrial packs

No.
1 Melto 1 Cocoa mass
2 Cream 2 Cocoa butter
3 Turbo 3 Cocoa powder
4 Treat 4 Chocolate mass
5 Mega bite 5 Choco paste
6 Campco mini bar 6 Choco chips-milk
7 Eclairs 7 Dark chocolates
8 Playtime Premium milk choco Paste
8

Winner (jar) 9 Milk choco dip

9 Krust

Areca nut based Products: Areca nut also called a “supari” is available in

16
Different varieties and categorized by grades SSS, S, JJ.

Table No.1.3.c Areca nut based Products

1. Mora

2. Moti
3. Sevardhan
4. Jamnagar
5. Jeeni
6. Lindi
7. Jahaji

8. Jahajijeeni

Copper Sulphate Factory

CAMPCO has established one copper sulfate manufacturing unit at Sagar with 300
MTs capacity to meet the requirements of grower members. The areca nut tree’s health
is often found effected by various insects and other microorganism. It is sprayed on the
tree tops once or twice in a year.

Due to increased cost of production, CAMPCO stopped the production activity in 2005-
2006 and now it started to purchase the copper sulfate through quotation from other
manufacturers through tenders and engaged in marketing of copper sulfate.

17
Mobile Procurement Unit

Service at the doorsteps of the farmer has always been CAMPCO’s goal. They have a
mobile procurement unit at Theerthahalli to concentrate the interior area where there is
no adequate transportation is facility. The mobile van on notified day will go and
facilitate the areca nut growers to sell their produce.

1.3.8 Research and Development

The first step towards research was on 20.5.1998.A research and development trust with
Dr. D. Veerendra Heggade, Dharmasthala as its President and CAMPCO’s president as
its managing trustee has been established.

1.3.9 Achievements and Awards

• The best export awards 2004-05 for processing of CAMPCO chocolate.

• On June 2010 CAMPCO limited awarded the ISO 22000 certification pertaining
to food quality by the certification authority SGS of Switzerland.

• The company also achieved success towards adopting fully automated machines
for the production process.

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 CHAPTER 2: RESEARCH METHODOLOGY

Research methodology is the path through which researchers need to conduct their
research. It shows the path through which these researchers formulate their problem
and objective and present their result from the data obtained during the study period.

Following sections determine the strength, reliability and accuracy of project.

2.1 Objective of the study

The study attempts to determine the efficiency and effectiveness of managing financial
performance of CAMPCO from 2015-16 to 2019- 20. The purpose of this study is to
evaluate, analyze and examine the financial statements of CAMPCO LTD

1. To study the liquidity position of the company.

2. To study the various financial source of the company.

3. To study the profitability of CAMPCO ltd.

4. To study the solvency of CAMPCO ltd.

5. To study how effectively the company utilizes its assets in generating sales.

2.2 SCOPE OF THE STUDY

The study includes the data for a period of 5 years from the year 2016 to 2020. In this
regard the researcher has used the annual reports of the company for the last five years.
This scope of the study covers the areas relating to the financial analysis of the campco
ltd.

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 2.3 LIMITATIONS OF THE STUDY

• The study period is confined only to five years data from 2015-16 to 2019-20.
So it is not possible to have an in depth study of all documents, records and activities
before arriving at the conclusion based on the study.

• Predictive power of financial ratios relies on analyst’s perception, which

indicates subjectivity of the study.

• The result of the study may not be applicable for other organizations as it is
limited to CAMPCO only.

• The study is mainly based on the available published information, so it suffers

from certain limitations. It has not been possible to have an in depth study of the co -
operative due to non-revealing of certain facts by the co-operatives executives of the
apprehension that, it would adversely affect the interest of the organization. However,
efforts have been made to elicit the information to the possible extent.

2.4 TOOLS OF FINANCIAL ANALYSIS (METHOD)

At its most basic, financial analysis can be defined as a way to analyze the strengths
and weaknesses of an organization’s financial position. Data is collected from certain
financial records and then analyzed to understand how a business is paying its debts, if
it has enough capital to invest and create further income and revenue streams, or even
just analyze how efficiently they’re operating – are they seeing profits in line with how
many employees they have, for instance. Some may liken a financial analysis to a
consumer credit score, except that instead of just evaluating debts and payments, it
brings in other financial criteria such as current assets and potential liquidity. This kind
of full financial picture helps businesses better understand where to focus their attention
and how to strategize around their goals. Financial statement analysis is a process, not
a tool, however. There are several techniques and tools that help businesses get to the
heart of the financial matters. And some of them used here are:

1. Comparative Financial Statements

20
2. Common Size Statements
3. Trend Ratios or Trend Analysis

2.4.1 Comparative Financial Statements

The preparation of comparative financial and operating statement is an

important device of horizontal financial analysis. As their very name suggests,
comparative financial statements are statements of the financial position of a business
so designed as to provide time perspective to the consideration of various elements of
financial position embodied in such statements. Generally, Balance Sheet and Income
Statement which alone are prepared in a comparative form because they are the most
important statements of financial position. In these statements figures for two or more
periods are placed side by side to facilitate comparison. These statements render
comparison between two periods of time and exhibit the magnitude and direction of
historical changes in the operating results and financial status of a business. Financial
statements of two or more firms may also be compared for drawing inferences. This is
known as inter-firm comparison. The statement also provides for columns to indicate
the change from one year to another in absolute terms and also in percentage form.

2.4.2 Common Size Statement

Financial statements when read with absolute figures are not easily
understandable. They are even misleading. Each item of assets is converted into
percentage to Total Assets and each item of Capital and Liabilities is expressed to Total
Liabilities and Capital Fund. Thus the whole Balance Sheet is converted into percentage
form. Such converted Balance Sheet is known as Common-Size Balance Sheet. When
Balance Sheets of the same concern for several years or when Balance Sheets of two or
more than two concerns for the same year are converted into percentage form and
presented as such, they are known as Comparative Common-Size Balance Sheets.
Again, in Profit and Loss Account Sales figure is assumed to be equal to 100 and all
other figures are expressed as percentage to sales. Similarly, in Balance Sheet the total
of assets or liabilities is taken as 100 and all the figures are expressed as percentage of

21
the total.

2.4.3 Trend Analysis

The Comparative and Common-size statements suffer from a major limitation

i.e., absence of a basic standard to indicate whether the proportion of an item is normal
or abnormal. Trend analysis overcomes this limitation. This method is also an important
and useful technique of financial statement analysis. The calculation of trend ratio
involves the ascertainment of arithmetical relationship which each item of several years
to the same item of base year. Thus, one particular year out of many years is taken as
base. The value of one particular item out of several items shown in the financial
statements are converted into ratio or percentage taking of that item in base year as
equal to100.

2.4.4 Ratio Analysis

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain

a quick indication of a firm's financial performance in several key areas. The ratios are
categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset
Management Ratios, Profitability Ratios, and Market Value Ratios.

Ratio Analysis as a tool possesses several important features. The data, which
are provided by financial statements, are readily available. The computation of ratios
facilitates the comparison of firms which differ in size. Ratios can be used to compare
a firm's financial performance with industry averages. In addition, ratios can be used in
a form of trend analysis to identify areas where performance has improved or
deteriorated overtime.

22
 RATIOS USED FOR ANALYSIS ARE:

1. Current Ratio

Current ratio is most common ratio for measuring liquidity. The current ratio
measures the short term solvency of a company it is the ratio between current assets
and the current liability.
Current assets includes cash and those assets which can be converted into cash within
a year such as bank balances, bills receivables, loans and advances, sundry debtors etc.,
Current liability includes those obligation maturing within a year like trade creditors,
bank overdrafts, bills payables and long term debt maturing in the current year.

2. Quick or Liquid Ratio

It indicates the relation between strictly liquid asset whose value is almost
certain on the one hand, and strictly liquid liabilities on the other. Generally speaking
quick ratio of 1:1 is considered satisfactory as a firm can easily meet all current claims.

3. Cash Ratio

When liquidity is highly restricted in terms of cash and cash equivalents, this
ratio should be calculated. Liquidity ratio measures the relationship between cash and
near cash items on the one hand, and immediately maturing obligations on the other.
Generally, 0.75:1 ratio is recommended to ensure liquidity. If the ratio is 1:1, then the
firm has cash on hand to meet all current liabilities.

4. Debt Equity Ratio

23
 Debt-to-Equity ratio is the ratio of total liabilities of a business to its
shareholders' equity. It is a leverage ratio and it measures the degree to which the assets
of the business are financed by the debts and the shareholders' equity of a business.

5. Proprietary Ratio

The proprietary ratio measures the amount of funds that investors have
contributed towards the capital of a firm in relation to the total capital that is required
by the firm to conduct operations.

6. Inventory Turnover Ratio

A ratio showing how many times a company's inventory is sold and replaced
over a period. The days in the period can then be divided bythe inventory turnover
formula to calculate the days it takes to sell the inventory on hand or "inventory turnover
days."

7. Debtors Turnover Ratio

Debtors Turnover Ratio indicates the speed at which the sundry debtors are
converted in the form of cash. It indicates the number of times the debtors are turned
over a year. It is the reliable measure of receivables from credit sales. The higher the
value the more efficient is the management of debtors. Similarly, lower the ratio means
inefficient management of debtors.

8. Working Capital Turnover Ratio

24
 The working capital turnover ratio measures how well a company is utilizing its
capital to support a given level of sales. Working capital is current assets minus current
liabilities. A high turnover ratio indicates that management is being extremely efficient
in using a firm's short-term assets and liabilities to support sales. Conversely, a low ratio
indicates that a business is investing in too many accounts receivable and inventory
assets to support its sales, which could eventually lead to an excessive amount of bad
debts and obsolete inventory.

9. Fixed Asset Turnover Ratio

A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a
company's ability to generate net sales from fixed-asset investments - specifically
property, plant and equipment (PP&E) - net of depreciation. A higher fixed-asset
turnover ratio shows that the company has been more effective in using the investment
in fixed assets to generate revenues.

10. Current Asset Turnover Ratio

Current Assets Turnover Ratio indicates that the current assets are turned over
in the form of sales more number of times. A high current assets turnover ratio indicates
the capability of the organization to achieve maximum sales with the minimum
investment in current assets. Higher the current ratio better will be the situation.

11. Total Asset Turnover Ratio

The total asset turnover ratio measures the ability of a company to use its assets

25
 to efficiently generate sales. This ratio considers all assets, current and fixed. Those
assets include fixed assets, like plant and equipment, as well as inventory, accounts
receivable, as well as any other current assets.

12. Gross Profit Ratio

Gross profit ratio shows the gap between revenue and trading cost.Normaly; the
gross profit ratio should remain the same from year to year, because of sales will
normally vary directly and in the same proportion with sales .A ratio of 25% to 30%
may be considered good.

13. Net Profit Ratio

The profit margin is indicative of management’s ability to operate the business

with sufficient success not only to recover from revenues of the period, the cost of
merchandise or services, the expenses of operating the business and the cost of
borrowed funds, but also a margin of reasonable compensation to the owners for
providing their capital at risk.

14. Return on Investment

A comparison of this ratio with similar firms, with industry average and over
time would provide sufficient insight into how efficiently the long term funds of owners
and creditors are being used. The higher ratio, the more efficient use of the capital
employed.

26
 2.5 FINANCIAL STATEMENT ANALYSIS

Financial performance analysis is an important tool used for find out the
financial performance of a firm. It plays a dominant role in setting a frame work for
managers’ decision making, because it gives clear picture of the financial position of
the organization that is whether the firm has sound financial position or not. So the
management can take appropriate decision for the successful running of the
organization the term financial analysis is also known as analysis and interpretation of
financial statement, refers to the process of determining then financial strength and
weakness of the firm by establishing strategic relationship between the item of balance
sheet, profit and loss account and other operative data.
Financial analysis is the process of identifying the financial strengths and
weakness of the firm by properly establishing relationships between the items of the
balance sheet and profit and loss account. The financial statements provide a
summarized view of the financial position and operations of a firm. The focus of
financial analysis is on key figures in the financial statements and the significant
relationship that exists between them. The analysis of financial statements is, thus, an
important aid to financial analysis.
According to Metcalf and Tetrad, “Financial statement analysis is a process of
evaluating the relationship between components parts of a financial statement to obtain
a better understanding of a firm’s position and performance.
A basic limitation of the traditional financial statements comprising the balance
sheet and loss is that they do not give all the information regarding the financial
operations of a firm. Thus the financial statements provide a summarized view of the
financial statements is thus an important aid to financial analysis. Financial is the
process of identifying the financial strengths and weakness of the firm by properly
establishing relationship between the items of the balance sheet and profit and loss
account. Financial analysis can be undertaken by parties outside the firm viz., owners,
creditors, investors and others. The nature of analysis will differ depending on the
purpose of the analyst.

27
 The focus of financial analysis on key figures in the statements and the
significant relationship that exists between them. The analysis of financial statement is
a process of evaluating relationship between components parts of financial statements
to obtain a better understanding of the firm’s position and performance. The first task
of the financial analyst is to select the information contained in the financial statements.
The second step involved in financial analysis is to arrange the information in a way to
highlight significant relationships. In a brief financial analysis is the process of
selection, relation and evaluation.

2.5.1 Advantages of Financial Statement Analysis

The different advantages of financial statement analysis are listed below:

 The most important benefit if financial statement analysis is that it provides an idea to
the investors about deciding on investing their funds in a particular company.
 Another advantage of financial statement analysis is that regulatory authorities like
IASB can ensure the company following the required accounting standards.
 Financial statement analysis is helpful to the government agencies in analyzing the
taxation owed to the firm.
 Above all, the company is able to analyze its own performance over a specific time
period.

2.5.2 Persons Interested in Financial Statement

The following are the groups who like to make use of financial statements:

1. Owners:
The owners provide funds or capital for the organisation. They possess curiosity
in knowing whether the business is being conducted on sound lines or not and whether
the capital is being employed properly or not. Owners, being businessmen, always keep
an eye on the returns from the investment. Comparing the accounts of various years
helps in getting good pieces of information.

28
2. Management:
The management of the business is greatly interested in knowing the position of
the firm. The accounts are the basis, on which the management can study the merits and
demerits of the business activity. Thus, the management is interested in financial
statements to find whether the business carried on is profitable or not. The financial
statements are the “eyes and ears of management and facilitate in drawing future course
of action, further expansion etc.”
3. Creditors:
Creditors are the persons who supply goods on credit, or bankers or lenders of
money. It is usual that these groups are interested to know the financial soundness
before granting credit. The progress and prosperity of the firm, to which credits are
extended, are largely watched by creditors from the point of view of security and further
credit. Profit and Loss Account and Balance Sheet are nerve centres to know the
soundness of the firm.
4. Employees:
Payment of bonus depends upon the size of profit earned by the firm. The more
important point is that the workers expect regular income for the bread. The demands
for wage rise, bonus, better working conditions etc., depend upon the profitability of
the firm and in turn depend upon financial position. For these reasons, this group is
interested in financial statements.
5. Investors:
The prospective investors, who want to invest their money in a firm, of course
wish to see the progress and prosperity of the firm, before investing their money, by
going through the financial statement of the firm. This is to safeguard the investment.
For this purpose, this group is eager to go through the accounting statements which
enable them to know the safety of investment.
6. Government:
Government keeps a close watch on the firm which yield good amount of
profits. The state and central governments are interested in the financial statements to
know the earnings for the purpose of taxation. At present most of the business concerns
are organized and operated in the form of Joint Stock Companies. One of the main
features of company form of organization is that there is distinction between providers
of capital and those entrusted with the actual operation and the management of the

29
 business. Just to safeguard the interest of former class, the government is interested in
the financial statements.

2.6 LIMITATIONS OF FINANCIAL STATEMENTANALYSIS

Analysis of financial statement is a very important device but the person using. Thus
device must keep in mind its very limitation. The following are main limitation of the
analysis.

1. Historical nature of financial statement: The basic nature of these statements is

historical, i.e., relating to the past record. Past can never be a precise and infallible index
of the future and can never be hundred present helpful for the future forecast and
planning.
2. No substitute for judgment: Analysis of financial statement is an instrument tool
which can be used profitability by an expert analyst but may lead to faculty conclusion
if used by un killed analyst. The result of analysis thus should be taken as judgment or
conclusion.
3. Reliability of figures: The reliability of analysis depends on reliability figures of
financial statement understudy.
4. Single year analysis is not much valuable and useful: The analysis of these
statements relating to a single year only will have limited use and value. It will not be
advisable to depend fully on such analysis.
5. Result may have different interpretation: Different uses may differently interpret the
results or indications devised from the analysis of these statements.
6. Changes in accounting method: Due to changes in accounting method, the figures of
the current period may have no comparable base and then the whole exercise of analysis
will become futile and will be little value.

30
2.7 STATEMENT OF THE PROBLEM

Development of industries depends on several factors such as financial,

personal, technology, quality of the product and marketing. Out of these financial
aspects assumes a significant role determining the growth of industries. As the capital
is scarce in our country, how for this scarce capital can be effectively utilized in our
industries is a debatable point.
Certain aspects of the study unit dealt under the study are mentioned here.
Regarding the company-CAMPCO Ltd, its origin, growth, production capacity,
production facilities, quality control and process control are taken into account.
Regarding the financial performance, the sales, purchases, gross profit, net profit,
operating profit, operating expenses, interest and tax and also assets and liabilities of
the company are analyzed.

2.8 METHOD OF DATA COLLECTION

There are two basic means of collection of data as follows:

a) PRIMARY DATA
b) SECONDARY DATA

The researcher uses both the methods of data collection for his convenience. But
researcher gives more emphases on secondary data because the researcher
undertakes research in Financial Performance practices for which researcher needs
all Annual reports and records from the selected companies, which are in nature of
secondary data. Researcher must be very careful in using secondary data and make
a minute scrutiny because it is just possible that the secondary data may be
unsuitable or may be inadequate in the context of the problem, which the researcher
wants to study. The researcher must, before using the secondary data, see that they
possess of

31
 (i) Reliability of data
(ii) (ii) Suitability of data
(iii) Adequacy of data
Here, Secondary date is been used. Secondary data are the second hand
information. This was collected from the company website, company records, journals
of the company, annual reports of the company and several financial management text
books

2.9 TOOLS OF DATA COLLECTION

Several Kinds of tools and technique are used to evaluate and appraise the
financial statement of a concern. The main objective of these technique is to minimize
or reduce the financial data collected and used in a more appropriate and understandable
terms. For the purpose of data analysis and also to make the study more effective both
financial and statistical tools have been used. Financial tools used are:

 ratio analysis
 common size statements,
 trend analysis
 Comparative statements.

32
 CHAPTER 3: REVIEW OF LITERATURE

For this study, Researcher has reviewed various available publications of the existing
literature to get the proper information and knowledge regarding the research topic.
According to the survey and review of these literature clears that Financial Performance is
a developing concept and why certain studies conducted in context to the performance
based value added reporting to the Indian industry sector. The researcher has studied out
the works had been done under these sorts of research. Some of these are as under:

1. Chakravarty and Reddy had written an article on the financial performance of the
industries for period from 1967 to 1971 by making comparison in 1973.

They used ratio analysis as major tool for financial performance and had studied 22 ratios
of profitability, proprietary, liquidity and turnover groups.

2. A A. Khan conducted a study entitled „Working Capital Analysis‟ the study was mainly
devoted to the measurement of profitability with reference to five Tire companies in 1982.
The study covered under the following indicators.

(1) Ratio Analysis

(2) Common Size Statement Analysis.

Researcher also measured and analyzed capital structure of the companies. The efficiency
of such companies was very poor and it was at satisfactory level in only one or two
companies. The profitability of such companies was unsatisfactory while in other
companies it was satisfactory.

33
3. Praveen Kumar Jain conducted a study entitled, Management of Working Capital‟
with special reference to seven paper companies in 1989. The study was mainly devoted to
working capital and liquidity analysis with the help of following indicators (1) Trend
Analysis (2) Ratios Analysis. Researcher analysed

that the working capital trend was not significant. The seven years average percentage of
inventory to total current assets was very high in the three companies while it was very low
in one company and satisfactory in remaining companies.

4. Dr. Pramod Kumar published a Book in 1991, “Analysis of Financial statements of

Indian industries.” The study covered the 17 private, 5 state owned and 1 central public
sector companies. He studied analysis of activities, assessment of profitability, return on
capital investment, Analysis of financial structure, Analysis of fixed assets and working
capital. In this research he revealed various problems of cement industries and suggested
remedies for the problems. He also suggested for the improvement of profitability and
techniques of cost control.

5. Dr. D. K. Mittal published a book in 1994, touching on the various aspects of the cement
industries like growth of the industries, regional up gradation and modernization, energy
efficiency, price and technological controls and financial performance. The study covers
more than 45 cement companies. The study pertains to the period from 1984-85 to 1991-
92. On the profit performance front, the study revealed that the industries‟ profit had fallen
despite sales growth, though at a slower pace.

6. D. Govind Rao and P. Mohana Rao conducted a study entitled “Impact of Working
Capital on Profitability in Cement Industry” in the year 1995. The Study was mainly
devoted to impact of working capital on profitability. A Researcher selected a single unit,
viz. Associated Cement Companies Limited of India (ACC). Research was done with the

34
help of correlation analysis between Impact of Working Capital and changes in
profitability.

7.Dr. S. J. Parmar published a book in 2001. The book is a systematic study of the modern
financial measurement techniques useful for management in planning and controlling
corporate activities. With increasing participation by the general public and financial
institutions as present and corporate bodies have to be on their guard and manage their
efficient financial efficiency in the area of globalization. This book covers topics of concept
and measurement of profitability, cost & sales trend, profit margin, assets turnover, analysis
of return on investment common size of value added statements.

8. Dr. Butalal C. Ajmera has done his Ph.d in “Interpretation and analysis of financial
statement of two selected units of Birla group”, in the year 2001 by using conceptual
framework of financial statement, Research plan, profile of the cement industries. Birla
group of companies a bird's eye view, liquidity position, financial structure and suggestion,
the period of 1994-95 to 1998-99. The study reveals the course of profitability.

9. Dr. Miss Kailash P. Damor has done research on “A comparative analysis of

profitability trends in co-operative sugar industry of India”, in the year 2002. In her research
she has given clear idea about profit and profitability. Profitability is related with two
words, Profit and Ability. We discuss the word profit in many senses but the word profit is
used as per its purpose, whereas the ability shows the capability of earning profit from
business. Profitability also shows our capacity of how much return we can give to our
investors on their investment.

10. Dr. Sanjay Bhayani published a book in 2003, “Practical financial statement analysis”
The study covered 16 public limited cement companies in private sector. He made study of
analysis of profitability, working capital, capital structure and activity of Indian cement
industry. In his research he revealed various problems of cement industries and suggested
remedies for the problems. He also suggested for the improvement of profitability and techniques
of cost control.

35
11. Dr. V. K. Sapovadia did his research work in year 2004. Under his research work he
studied financial performance of various co-operative sectors. For this purpose he also
calculated some ratios. Title of his study is "a comparative study on financial performance
appraisal of Indian Co-operative sector and USA based co-operativesector.

12. Ravi M. Kishore has written a book “Advanced Management Accounting” published
by Taxman Publishing Company, New Delhi in 2005. This book also covers the concept
and application of value added and the preparation guideline for value added statement and
generation of value and it impacts to examine the financial performance.

13. Dutta S. K. has written an article on “Indian tea industry an appraisal” which was
published in Management accountant in the year of March 1992. He analyzed the
profitability, liquidity and financial efficiency by using various ratios.

14. Dr. Harish P. Desai did his Ph.D. on "Financial performance appraisal of selected
district dairies co-operative in Gujarat" in May-2006. Under this study, He has made a
modest attempt in assessing the financial health of the selected co- operative dairy units by
applying accounting tools and techniques to the date of nine district co-operative dairy unions
in Gujarat state.

15. Dr. Rasik N. Bavaria has done his Ph.D. on A Comparative Analysis of Profitability
vis-A-vis Liquidity Performance in Cement Industry of India. PhD thesis, Saurashtra
University. Telecommunication, petroleum, coal, fertilizers, iron, steel and cement etc. are
the key infrastructure sectors of India. Cement industry is also plays a significant role, in
the rapid growth and development of a country, because cement is a pre-requisite of all
construction activities.

36
 CHAPTER 4: DATA COLLECTION, ANALYSIS & INTERPRETATION

4.1 DATA ANALYSIS AND INTERPRETATION

Financial statements are prepared primarily for decision-making. The statements are not
an end in them, but are useful in decision making. Financial analysis is the process of
determining the significant operating and financial characteristics of a firm from
accounting data. The profit and Loss Account and Balance Sheet are indicators of two
significant factors Profitability and Financial Soundness.

Analysis of statement means such treatment of the information contained in the two
statements as to afford a full diagnosis of the profitability and financial position of the firm
concerned. 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
trends of these factors as shown in a series of statements. The main function of financial
analysis is the pinpointing of the strength and weakness of a business undertaking by
regrouping and analysis of figures contained in the financial statements, by making
comparisons of various components and examining their content.
The following are the analytical method and devices adopted in analyzing the
financial statement. These are also turned as tools of financial statement analysis.
• Ratio analysis
• Comparative statement analysis
• Common size statement analysis
• Trend analysis

37
 4.2 RATIO ANALYSIS

4.2.1 Liquidity Ratio

4.2.1.a Current Ratio ( in lakhs)

Year Current Assets Current Liabilities Ratios

2015-16 31506.82 5258.09 5.99

2016-17 43362.24 6428.67 6.74
2017-18 27862.27 4936.03 5.64
2018-19 24238.16 3632.70 6.67
2019-20 30378.56 3875.66 7.83

Current Ratios
9
7.83
8
6.74 6.67
7
5.99
6 5.64

5
4
3
2
1
0
2015-16 2016-17 2017-18 2018-19 2019-20

The current ratio of a firm measures its ability to meet short term obligations. It indicates
the rupees of current assets available for each rupee of current liability. In a sound business,
a current ratio of 2:1 is considered an ideal one. It can be observed from the above chart

38
that the current ratio of CAMPCO Ltd is fluctuating between 6.67 and 7.83 during the
period of study. The firm will not find much difficulty in meeting its current liabilities as
the current asset is higher than its current liabilities .The current ratio of CAMPCO shows
above standard.

4.2.1.b Quick or liquid ratio

TableNo.4.2.1.b (in lakhs)

Year Liquid Current Ratios

Assets Liabilities
2015-16 9967.34 3632.70 2.74
2016-17 9289.21 3875.66 2.40
2017-18 11092.25 4936.03 2.25
2018-19 10761.03 5258.09 2.05
2019-20 22617.29 6428.67 3.52

Liquidity Ratios
4 3.52
3.5
3 2.74
2.4 2.25
2.5 2.05
2
1.5
1
0.5
0
2015-16 2016-17 2017-18 2018-19 2019-20

It indicates the relation between strictly liquid asset whose value is almost certain on the
one hand, and strictly liquid liabilities on the other. Quick ratio of 1:1 is considered
satisfactory. It can be observed from the above chart that the Quick ratio of CAMPCO Ltd

39
is fluctuating between 2.05 and 3.52 during the period of study. Quick ratio of CAMPCO
ltd is more than the standard ratio of 1:1, the financial position of the concern is sound and
good.

4.2.1.c. Cash Ratio

TableNo.4.2.1.c ( in lakhs)

Year Cash Current Ratio

Liabilities
2015-16 1344.82 3632.70 0.37
2016-17 1806.96 3875.66 0.47
2017-18 2014.85 4936.03 0.41
2018-19 2250.61 5258.09 0.43
2019-20 2122.25 6428.67 0.33

Cash Ratio
0.5 0.47
0.45 0.43
0.41
0.4 0.37
0.35 0.33
0.3
0.25
0.2
0.15
0.1
0.05
0
2015-16 2016-17 2017-18 2018-19 2019-20

40
Liquidity ratio measures the relationship between cash and near cash items on the one hand,
and immediately maturing obligations on the other. Generally, 0.75:1 ratio is recommended
to ensure liquidity
The cash position ratio of CAMPCO is not satisfactory. The reason for low cash ratio may
be because of firms major part of current assets is constituted by debtors and investment in
inventories

4.2.2 Leverage Ratio

4.2.2.a Debt Equity Ratio

Year Debt Equity Ratio

2015-16 15392.76 7125.74 2.16

2016-17 19228.35 9686.73 1.99
2017-18 13023.21 13670.47 0.95
2018-19 15878.16 15709.14 1.01
2019-20 21801.37 18379.75 1.17

41
 Debt equity Ratio
2.5
2.16
1.99
2

1.5
1.17
0.95 1.01
1

0.5

0
2015-16 2016-17 2017-18 2018-19 2019-20

Generally acceptable norms for debt equity are considered to be 2:1.During 2015-16 debt
equity ratio is higher than the standard rate, which shows that the claims of creditors are
higher than those of owners. A very high ratio is unfavorable from the company’s point of
view. This introduces inflexibility in firms operations due to the increasing interference
and pressures from creditors. During the years 2016-17 to 2019-20 ratios is found to be
lesser than 2 which implies a greater claim of owners than creditors.

4.2.2. b. Proprietory Ratio

TableNo.4.2.2.b

42
 Year Shareholders Total Assets Ratio
Fund
2015-16 7125.74 27091.34 0.26
2016-17 9686.73 34077.63 0.28
2017-18 13670.47 33140.39 0.41
2018-19 15709.14 38330.72 0.41
2019-20 18379.75 50603.49 0.36

Proprietory Ratio
0.45 0.41 0.41
0.4 0.36
0.35
0.3 0.28
0.26
0.25
0.2
0.15
0.1
0.05
0
2015-16 2016-17 2017-18 2018-19 2019-20

Proprietary ratio relates the shareholder’s funds to total assets. The acceptable norm of the
ratio is 1:3.As proprietary ratio represents the relationship of owner’s funds to total asset,
higher the ratio better is the solvency position of the company. It is unsatisfactory but the
firm will find much difficulty in meeting the creditors at the time of liquidation of the firm.
Here the solvency ratio keeps on fluctuating over the years. During the current year 2019-
20 the ratio is above the standard which indicates better claim of shareholders on the total
assets of the firm.

4.2.2.c Fixed Asset Ratio

43
Table no 4.2.2.c
Year Fixed Assets Capital Ratio
Employed

2015-16 2526.31 22518.5 0.11

2016-17 3010.29 28915.08 0.10

2017-18 4572.07 26693.68 0.17

2018-19 6397.83 31587.3 0.20

2019-20 6773.15 40181.12 0.17

Fixed Asset Ratio

0.25
0.2
0.2 0.17 0.17
0.15
0.11 0.1
0.1

0.05

0
2015-16 2016-17 2017-18 2018-19 2019-20
years

Fixed asset ratio should not exceed 1:1.Generally a ratio of .67 is considered as satisfactory.
It is found that the ratio is fluctuating throughout the period of study and it is also found
that the ratio has neither exceeded 1:1 nor reached to 0.67. During the current year 2019-
20 the ratio is found to be 0.17 which indicates that the firm has invested very less amount
in fixed assets which might adversely affect the profitability.

44
4.2.3 Activity ratio

4.2.3. a. Inventory Turnover Ratio

Year Cost of goods Average Ratio Stock

Sold Stock Velocity
2015-16 51267.65 11829.94 4.33 84.30
2016-17 57919.14 17680.08 3.28 111.29
2017-18 85810.63 18929.69 4.53 80.57
2018-19 84807.82 18757.91 4.52 80.75
2019-20 105100.79 20745.37 5.07 71.99

Inventory Turnover
6
5.07
5 4.53 4.52
4.33
4
3.28
3

0
2015-16 2016-17 2017-18 2018-19 2019-20

45
It is seen from the calculations, that there is a continuous increase (except in the year 2016-
17) in the stock turnover ratios. There is a good progress in respect of sales policy. The
company was able to sell 4.33 by investing one in the stock, in 2015-16; the sales amount
to 4.53by investing one in stock in 2017-18 and increase its sales to 5.07 at cost
keeping its investment in stock at one in 2019-20.This is an indicator of good sales policy
of campco ltd.

4.2. b. Debtors Turnover Ratio

Table no 4.2.3.b

Year Net sales Debtors Ratio

(DTR)
2015-16 57586.24 7406.60 7.77
2016-17 66023.21 7171.27 9.21
2017-18 96032.45 8736.56 10.99
2018-19 94318.34 8033.15 11.74
2019-20 117523.45 20071.71 5.85

46
 Debtors turnover ratio
14
11.74
12 10.99

10 9.21
7.77
8
5.85
6

0
2015-16 2016-17 2017-18 2018-19 2019-20

Debtor’s turnover ratio of campco ltd shows a tremendous increase over the years till 2018-
19. During 2019-20 ratio is reduced to 5.85 times. Higher debtor turnover ratio is good
because higher debtor turnover ratio means, more quickly the money is collected. Debtor’s
turnover ratio of 2019-20 is 5.85 times which implies that campco’s debtors are not very
prompt in payment of their debts to the firm

4.2.3. c. Average Collection

Table no. 4.2.3.c

Year Number of DTR Ratio

Days (Days)
2015-16 365 7.77 46.98
2016-17 365 9.21 39.63
2017-18 365 10.99 33.21
2018-19 365 11.74 31.09

47
 2019-20 365 5.85 62.39

Average collection period

70
62.39
60

50 46.98
39.63
40 33.21 31.09
30

20

10

0
2015-16 2016-17 2017-18 2018-19 2019-20

Average collection period of campco ltd decreases from 2015-16 of 46.98 to 31.09 in 2018-
19 which implies the company is increasingly able to reduce the time it takes to collect on
its credit extended to customers. During 2018- 19 ratio increased to 62.39 days which
indicate the company has loosened its credit policies with customers, meaning that they
may have been extending credit to companies where they normally would not have. This
could temporarily boost sales, but could also result in an increase in sales revenue that
cannot be recovered, as shown in the Allowance for Doubtful Accounts.

48
4.2.3.d Working Capital Turnover Ratio

Table no. 4.2.3.d

Year Net Sales Working Ratio

Capital
2015-16 57586.24 20605.46 2.79
2016-17 66023.21 26502.9 2.49
2017-18 96032.45 22926.24 4.19
2018-19 94318.34 26248.73 3.59
2019-20 117523.45 36933.57 3.18

Working capital turnover

4.5 4.19
4 3.59
3.5 3.18
3 2.79
2.49
2.5
2
1.5
1
0.5
0
2015-16 2016-17 2017-18 2018-19 2019-20

Working capital ratio of campco ltd shows a fluctuating trend over the study period. It
shows the maximum of 4.19 times in 2017-18 and it reduced in 2019-20 to 3.18 times

49
Fluctuations in working capital affect the day to day operation of campco ltd and it is not
a good sign.

4.2.3.e Fixed Asset Turnover Ratio

Table NO- 4.2.3.e

Year Net Sales Fixed Assets Ratio

2015-16 57586.24 2526.31 22.79

2016-17 66023.21 3010.29 21.93
2017-18 96032.45 4572.07 21.00
2018-19 94318.34 6397.83 14.74
2019-20 117523.45 6773.15 17.35

Fixed Asset Turnover

25 22.79
21.93
21
20
17.35
14.74
15

10

0
2015-16 2016-17 2017-18 2018-19 2019-20

This ratio measures the efficiency in the utilization of fixed assets. A higher ratio reflects
the owner trading and lower ratio indicates idle capacity and excess investment in fixed

50
asset. The companies fixed asset turnover ratio is very high in all the years as against the
standard of 5 times, which means that firm has over trading and its investment in fixed is
not at all sufficient. Hence the ratio indicates that the fixed asset of the company is fully
utilized and it has to make further investment in fixed asset.

4.2.3.f .Current Asset Turnover Ratio

Table no-4.2.3.f

Year Net Sales Current Ratio

Assets

2015-16 57586.24 24238.16 2.38

2016-17 66023.21 30378.56 2.17
2017-18 96032.45 27862.27 3.45
2018-19 94318.34 31506.82 2.99
2019-20 117523.45 43362.24 2.71

51
 Current Asset Turnover
4
3.45
3.5
2.99
3 2.71
2.38
2.5 2.17
2
1.5
1
0.5
0
2015-16 2016-17 2017-18 2018-19 2019-20

The ratio measures the efficiency in utilization of current asset. The ratio shows a
fluctuating trend during the study period. The ratio decreases from 3.45 times in 2017-18
to 2.71 times in 2019-20. The current asset turnover ratio of campco is not bad.

4.2.3.g Total Asset Turnover Ratio

Table no- 4.2.3.g

Year Net Sales Total Ratio

Assets
2015-16 57586.24 27091.34 2.13
2016-17 66023.21 34077.63 1.94
2017-18 96032.45 33140.39 2.89
2018-19 94318.34 38330.72 2.46
2019-20 117523.45 50603.49 2.32

52
 Total Asset Turnover
3.5
2.89
3
2.46
2.5 2.32
2.13
1.94
2

1.5

0.5

0
2015-16 2016-17 2017-18 2018-19 2019-20

Total asset turnover ratio measures the relationship between total asset and sales. The
company has the ratio in the year 2015-16 to 2019-20 are 2.13,1.94,2.89,2.46 and 2.32.It
indicates that the company has decreasing trend in the first two years and there after it is
increasing in the year 2017-18 but it is decreasing in the following years of 2018-19 and
2019-20 .

4.2.4 Profitability Ratio

4.2.4.a .Gross Profit Ratio

Table no- 4.2.4.a

Year Gross Profit Net Sale Ratio

2015-16 6318.59 57586.24 10.97

2016-17 8104.07 66023.21 12.27

53
 2017-18 10221.82 96032.45 10.64
2018-19 9510.52 94318.34 10.08
2019-20 12422.66 117523.45 10.57

Gross Profit Ratio

14

12 12.27
10.97 10.64 10.57
10 10.08

6 Ratio

0
2015-16 2016-17 2017-18 2018-19 2019-20

Gross profit ratio shows the gap between revenue and trading cost. Ratio of 25% to 30%
may be considered good. It can be observed from the above chart that the Gross profit ratio
of CAMPCO Ltd was fluctuating between 2015-16 is 10.97 percent and 2019-20 is
10.57 percent. Ratio shows the highest during 2016-17 is 12.27.Fluctuations in the gross
profit ratio may due to the increase in cost of production. It indicates that gross profit ratio
was unfavorable to the company during the study period.

54
4.2.4.b Net Profit Ratio

Table no-4.2.4.b

Year Net Profit Net Sales Ratio

2015-16 940.38 57586.24 1.63

2016-17 1286.89 66023.21 1.95
2017-18 1510.67 96032.45 1.57
2018-19 1485.31 94318.34 1.57
2019-20 3993.69 117523.45 3.40

Net Profit Ratio

4
3.5 3.4
3
2.5
2 1.95
1.5 1.63 1.57 1.57

1
0.5
0
2015-16 2016-17 2017-18 2018-19 2019-20

Net profit is the net profit earned by a business and its net sales. Higher the ratio better is
the profitability. The ideal net profit ratio is 5 percent to 10 percent. The result shows lesser
the ratio than the ideal ratio.Net profit ratio increased by 3.4 percent in 2019-20 as against
1.57 percent of 2017-18.Net profit ratio is in increasing trend which is a good sign to the
company.

55
4.2.4.c Return on Investment

Table no 4.2.4.c

Year Profit Before Capital Ratio

Interest Employed (%)
and Tax
2015-16 2708.53 22518.5 12.03
2016-17 2265.22 28915.08 7.83
2017-18 5349.25 26693.68 20.04
2018-19 3439.74 31587.3 10.90
2019-20 6206.17 40181.12 15.45

Rerturn on investment
25

20 20.04

15 15.45

12.03
10 10.9
7.83
5

0
2015-16 2016-17 2017-18 2018-19 2019-20

A comparison of this ratio with similar firms, with industry average and over time would
provide sufficient insight into how efficiently the long term funds of owners and creditors

56
are being used.
Return on investment of campco ltd for 2017-18 of 20.04 percent and 2019-20 of 15.45
percent considered to be satisfactory, as it achieved the industry standard of 15 percent.
This indicates the efficient use of long term funds of owners and creditors.

57
 4.3 COMPARATIVE BALANCE SHEET

TableNo.4.3.a Comparative Balance Sheet as on 2014-15 and2015-16

Particulars 2014-15 2015-16 Absolute Percentage

Change change
A.Equity Liabilities
1. Members Fund
Share capital 224749500 261184200 36434700 16.21
Reserve fund and other reserve 743923505 1105863105 361939600 48.65
Profit and loss account 128689530.1 151067435.7 22377905.6 17.39
2.Non current liabilities
Long term borrowings 14919294463 668382831.9 823546614 55.20
3.Current liabilities
Current liabilities 352741711 437412836 84671125 24.00
Deposits 430905189 633938521.1 203033332 47.12
Other current liabilities 3809631.56 4299205.36 489573.8 12.85
Unpaid dividend 15922935 24721323 8798388 55.26
Interest accured on deposits 15092001 27169987 12077986 80.03

Grand total of liabilities 3407763449 3314039445 93724004 2.75

B.Assets
1.Non current assets
Tangible assets 301028955.7 457207450.4 156178494 51.88
Investments and deposits 68877344.23 70601506.54 17241623 2.50
2 .Current assets
Inventories 2108934780 1677002236 431932544
20.48
Trade recievables 71727366.2 873636199.6 156528833
21.83
Cash in hand and at bank 180696328.6 201454764 20789147.8
11.51
Short term loans and advances 15377763 17858940 2481177
16.13
Market intervention schemes 8957025.5 8957025.5 ------------------
------------------ -------------
Market support price 3708505.5 37085055 --------------
Missappropriation – recoverable 3055380.45 ------------------
305538045 ---------------
506724.8
Cash thef amount recoverable ------------------ 506724.8

Grand total of assets 3407763449 3314039445 93724004 2.75

58
 COMPARATIVE BALANCE SHEET

TableNo.4.3.b Comparative Balance Sheet as on 2015-16 and2016-17

Particulars 2015-16 2016-17 Absolute Percentage

Change change
A.Equity Liabilities
1. Members Fund
Share capital 261184200 294649800 33465600 12.81
Reserve fund and other reserve 1105863105 1276264997 170401891 15.41
Profit and loss account 151067435.7 148531481 25359354.74 1.68
2.Non current liabilities
Long term borrowings 668382831.9 8251637414 156780909 23.46
3.Current liabilities
Current liabilities 437412836 4527615575 15348721.4 3.51
Deposits 633938521.1 762652336' 128713835 20.30
Other current liabilities 4299205.36 4299205.36 ---------------
Unpaid dividend 24721323 33944659 9223336 37.31
Interest accured on deposits 27169987 34804567 7634580 28.1

Grand total of liabilities 3314039445 3833072365 519032919 15.66

B.Assets
1.Non current assets
Tangible assets 457207450.4 639783241.1 182575790 39.93
Investments and deposits 70601506.54 42606484.96 27995021.5 39.64
2 .Current assets
Inventories 1677002236 2074578773 23.71
Trade recievables 873636199.6 803314960.7 397576537
8.05
Cash in hand and at bank 201454764 225060774.7 70341238'
235752982 11.70
Short term loans and advances 17858940 31500494
13641554 76.39
Market intervention schemes 8957025.5 8957025.5
Market support price -------------
37085055 3708505.5
Missappropriation – recoverable 305538045 305538045 --------------
Cash thef amount recoverable 506724.8 506724.8 ---------------
--------------

Grand total of assets 3314039445 3833072365 519032919 15.66

59
 TableNo.4.3.c Comparative Balance Sheet as on 2016-17 and2017-18

Particulars 2016-17 2017-18 Absolute Percentag

Change e change
A.Equity Liabilities
1. Members Fund
Share capital 294649800 357897100 63247300 21.46
Reserve fund and other reserve 1276264997 1480078173 203813176 15.97
Profit and loss account 148531481 399368872.5 250837391 168.88
2.Non current liabilities
Long term borrowings 8251637414 1226021496 400857754 48.58
3.Current liabilities
Current liabilities 4527615575 536540939.7 103779382 22.92
Deposits 762652336' 9341161115 25.10
Other current liabilities 4299205.36 379248056 191463754 11.79
Unpaid dividend 33944659 41209443 (506724.8) 20.87
Interest accured on deposits 34804567 41324699 7264784 18.73
6520132

Grand total of liabilities 3833072365 5060349315 1227276951 32.02

B.Assets
1.Non current assets
Tangible assets 639783241.1 6773153544 375321132 5.86
Investments and deposits 42606484.96 46809697_78 4203212.82 9.87
2 .Current assets
Inventories 2074578773 2074495136 (83616.89)
0.004
Trade recievables 803314960.7 148207653.5 757778825
12835637.8 33.83
Cash in hand and at bank 225060774.7 212225136.8
(4888459) 5.70
Short term loans and advances 31500494 26612035
1279633946 15.52
Sundry debtors 579329424.6 1858963370
Market intervention schemes 220.88
8957025.5 8957025.5
Market support price ------------
3708505.5 37085055
Missappropriation – recoverable -
305538045 305538045
Cash thef amount recoverable 506724.8 -------------
(506724.8)
-
-------------
--
(100)
Grand total of assets 3833072365 5060349315 1227276951 32.02

60
TableNo.4.3.d Comparative Balance Sheet as on 2017-18 and 2018-19

61
TableNo.4.3.e Comparative Balance Sheet as on 2018-19 and 2019-20

62
Interpretation:

2014-15 and 2015-16

The comparative balance sheet of campco ltd shows a 16.21 percent increase in share
capital in 2015-16 as compared to 2014-15.Current liability has increased by 24 percent
due to decrease in inventory. Total liability shows a 2.75 percent decrease which is
favorable to the business.
Fixed asset shows an increase of 51.88 percent and investment shows 2.50 percent increase.
Inventory shows a decrease of 20.48 percent due to effective inventory control which is
positive to the business. The total asset is decreased by 2.75 percent due to decrease in
inventory.

2015-16 and2016-17

The comparative balance sheet of campco ltd shows a 12.81 percent increase in share
capital in 2016-17 as compared to 2015-16.Current liability has increased by 3.51 percent.
Total liability shows a 15.6 percent increase. Fixed asset shows an increase of
39.93 percent and investment shows 39.65 decreases. Profitability of campco limited
reduces to the minimum of 1.68 percent.

2016-17 and 2017-18

It is observed from the comparative balance sheet that cash in hand position of campco ltd
reduces to the extent of 5.70 percent against 2016-17, which reduces the short term
liquidity positions. Increase in debtors by 220.88 percent (more than the double the amount
of 2016-17) increased the borrowings of the compco by 48.58 percent.

2017-18 and 2018-19

63
It is observed from the comparative balance sheet that there is 5.38 percent increase in
share capital in 2018-19 as compared to 2017-18. Cash in hand position of campco ltd
increases to 169.26 percent against 2017-18,which indicates high liquidity position of the
company. Fixed asset shows an increase of 21.5 percent and investment shows 5.55
percent increase. The total asset is decreased by 8.43 percent.

2018-19 and 2019-20

The comparative balance sheet of campco ltd shows 8.03 percent increase in share capital
in 2019-20 as compared to 2018-19. Reserve funds set aside during 2019-20by
23.74 percent more than that of 2018-19.Increase in reserve fund reduces the spending
from general funds. Total liability shows
11.91 percent increase which is not so favorable to the business.
Fixed asset shows an increase of 1.45 percent and investment shows 4.04 percent increase.
Inventories shows an increase of 29.83 percent in 2019-20 as compared to 2018-19.

64
4.4 COMPARATIVE PROFIT AND LOSS ACCOUNT

Comparative income statement for the year ending 2014 -15 and 2015-16

Table No.4.4.a

65
Comparative income statement for the year ending 2015-16 and 2016-17 Table
No.4.4.b

66
Comparative Income Statement for the year ending 2016-17 and 2017-18

Table No.4.4.c

67
Comparative Income Statement for the year ending 2017-18 and 2018-19

Table No.4.4.d

68
TableNo.4.4.e

Comparative income statement for the year ending 2018-19 and 2019-20

69
Interpretation:

2014-15 and 2015-16

The comparative income statement of campco ltd shows that 14.65 percent increase in sales
during 2015-16 as against 2014-15.Increse in sales increases the gross profit by
28.25 percent. Cost of goods sold increased proportionally to sales by 12.97 percent.Net
profit after tax of campco ltd goes up by 36.85 percent and operating profit by 33.03 percent
as against the previous year.

2015-16 and 2016-17

The income statement shows that though the sales have gone up in 2016-17 by 45.45
percent compared to 2015-16,the gross profit increased by 26.13 percent and cost of goods
increased more than the increase sales in percentage. The net profit also increased by 17.39
percent. Only non operating expenses declined to the extent of 54.45 percent and non
operating income increased by 11.30 percent.

2016-17 and 2017-18

The comparative income statement of campco ltd indicates that performance of the
company was not satisfactory.Net sales of the company decreases by
1.78 percent, gross profit by 6.96 percent and net profit by 1.67 percent against 2016-17.

2017-18 and 2018-19

The above statement shows the excellent performance of campco ltd in respect of sales
(24.60 percent), gross profit (30.62 percent), operating profit (50.24) and net profit
(68.88percent).Moreover,thecompanyisabletoreduceitsnonoperatingexpensesby
7.93 percent.

70
2018-19 and 2019-20

The comparative income statement of campco ltd shows that 31.14 percent increase in
salesduring2019-20 as against2018-19.Increase in sales increases the gross profit by
48.04 percent. Cost of goods sold increased proportionally to sales by 29.15percent.Net
profit after tax of campco ltd goes up by 24.13 percent and operating profit by 40.69 percent
as against the previous year. Hence the comparative income statement shows
excellent performance of campco ltd.

Years Amount Growth in

%
2015-16 1932.58 100
2016-17 2247.50 116.30
2017-18 2611.84 135.15
2018-19 2946.50 152.46
2019-20 3578.97 185.19

71
 Share Capital
200
185.19

150 152.46
135.15
116.3
100 100

50

0
2015-16 2016-17 2017-18 2018-19 2019-20

The share capital of the company is in increasing trend which means that firm has issued
additional owned capital to reduce its high debt fund in its finance. It is a good sign to the
business as it can improve the solvency of the firm.

RESERVE FUND
Table.No.4.5.b ( inlakhs)

Years Amount Growth in

%
2015-16 5192.89 100
2016-17 7439.23 143.26
2017-18 11058.63 212.96
2018-19 12762.65 245.77
2019-20 14800.78 285.02

72
 Reserve fund
300 285.02
245.77
250 212.96
200
143.26
150
100
100
50
0
2015-16 2016-17 2017-18 2018-19 2019-20

A reserve fund is a fund which is established for the purpose of covering expenses which
will come up in the future. The goal of this type of fund is to make sure that money is set
aside to cover expenses so that these expenses do not require spending general fund.
Reserve fund of campco ltd shows an increasing trend. This shows that company will not
find any difficulties in the future prospects. Reserve funds have almost trippled as against
2018-19.

73
NET PROFIT
TableNo.4.5.c ( inlakhs)
Years Amount Growth in

%
2015-16 940.38 100

2016-17 1286.89 136.85

2017-18 1510.67 160.64

2018-19 1485.31 157.95

2019-20 3993.69 424.69

Net profit
500

400 424.69

300

200
136.85 160.64 157.95
100 100

0
2015-16 2016-17 2017-18 2018-19 2019-20

Net profit of campco ltd shows an increasing trend over the years (except during 2014- 15).
Company has achieved a record net profit during 2019-20, which is four times the profit
as against 2018-19.

74
SALES
TableNo.4.5.d
Years Amount Growth in

%
2015-16 57586.24 100
2016-17 66023.21 114.65
2017-18 96032.45 166.76
2018-19 94318.34 163.79
2019-20 117523.45 204.08

Sales
250

200 204.08

166.76 163.79
150

114.65
100 100

50

0
2015-16 2016-17 2017-18 2018-19 2019-20

The sale of the company shows an increasing trend during the study period. Sales doubled
(204.08 percent) during 2019-20 as against 2015-16.The promotional efforts taken by the
company may be one among the reason for the increased sales trend over theyear.

75
WORKING CAPITAL
Years Amount Growth in

%
2015-16 20605.46 100
2016-17 26502.9 128.62
2017-18 22926.24 111.26
2018-19 26248.73 127.39
2019-20 36933.57 179.24

Working capital
200
180 179.24
160
140
128.62 127.39
120
111.26
100 100
80
60
40
20
0
2015-16 2016-17 2017-18 2018-19 2019-20

Working capital trend of campco shows a continuous increase over the study period which
implies that firm will not find any difficulties in running its day to day operations. In the
year 2019-20 trend goes to 179.24 times. Working capital trend of campco shows a good
sign.

76
 Chapter 5: CONCLUSIONS, FINDINGS & SUGGESTIONS

5.1 FINDINGS
 The current ratio of CAMPCO is found above standard. The company will not find much
difficulty in meeting its current liabilities as the current asset is higher than its current
liabilities.
 Quick ratio of CAMPCO ltd is more than the standard ratio of 1:1; hence the financial
position of the concern is sound and good.
 The cash position ratio of CAMPCO is not satisfactory. The reason for low cash ratio is
because of firms major part of current asset is constituted by debtors and investment in
inventories.
 Debt Equity ratio during the last four years (from 2016-17 to 2019-20), the ratio is below
2, which indicates that the company is not depending more on debt capital.
 Proprietary ratio is found unsatisfactory but the firm will find much difficulty in meeting
the creditors at the time of liquidation of the firm.
 The company is able to sell 4.33 by investing one in the stock, in 2015-16; the sales amount
to 4.53 by investing one in stock in 2017-18 and increase its sales to 5.07 at cost keeping its
investment in stock at one in 2019-20.This is an indicator of good sales policy of campco ltd.

 Debtor turnover ratio is good because higher debtor turnover ratio means, more fastly,
CAMPCO is collecting money. Hence liquidity position is strong.
 Average collection period during 2019-20 is high, which indicate the company has
loosened its credit policies with customers, meaning that they may have been extending
credit to companies where they normally would not have.
 Companies fixed asset turnover ratio is very high in all the years as against the standard of
5 times, which means that firm has over trading and its investment in fixed is not at all
sufficient. Gross profit ratio was unfavorable to the company during the study period.
 Gross profit ratio of CAMPCO is fluctuating between 2015-16 is 10.97 percent and 2019-
20 is 10.57 percent. Ratio shows the highest during 2016-17 is 12.27.Fluctuations in the
gross profit ratio may due to the increase in cost of production.
 Share capital trend of CAMPCO shows an increasing trend over the study period which

77
 shows a positive sign.
 Reserve fund of CAMPCO shows an increasing trend during the study period. This shows
that company will not find much difficulty in the future prospects. Reserve funds almost
triple in 2019-20 as against2015-16.
 Sales doubled during 2019-20 as against 2015-16.The promotional efforts taken by the
company may be one among the reason for the increased sales trend over the year.
 Company achieved a record net profit during 2019-20, which is four times the profit as
against2015-16.

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 5.2 SUGGESTIONS

 CAMPCO should try to reduce portion of the debt in the total capital structure and increase
the share capital. It will help to organization to improve earning capacity.
 The company should change its credit policy because it is selling more on credit and this
has reduced debtor’s turnover ratio in the recent year. It is better to reduce the credit period
or change the credit term to bring back the favorable debtors turnover ratio. But the
company has improved it debtor turnover ratio in the last year.
 In CAMPCO the net profit and the gross profit is low due to operating cost. So a detailed
analysis should be done in order to reduce operating cost.
 There is an excessive investment in inventories mainly on some of the non- moving and
absolute non moving items. Hence it has affected liquidity as well as profitability of the
company.
 The current ratio of CAMPCO is more than the required standard of 2:1, which result in
poor investment and excessive stock. Therefore it is suggested to bring down the current
ratio.
 CAMPCO should take step to reduce the cost and measures to improve the production of
raw material and semi-finished goods.
 Certain cost controlling strategies must be implemented for better result.
 The company has to give more preference towards the employee’s interests, which will
help them for attaining targets with the co- operation and participation of employees.

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5.3 CONCLUSION

In a highly competitive environment, cooperatives are ideal institutions tosupport

the farmers because of their spread and reach as also their close affinity with the farming
community. They are the only institutions to bank on for the Government for effective
price support and market intervention operations who have the infrastructure, experience
and expertise to act as an effective counter veiling force in the market. CAMPCO with the
dynamic leadership and management, coupled with unstinted support of the CAMPCO’s
Grower Members, the Institution could diversify its activities in different perspectives and
its time tested sustainability has acquired a unique status in thecountry.
The financial analysis of CAMPCO is conducted for the past 5 financial years
starting from 2015-16 to 2019-20.The financial performance analysis is done by using the
financial ratios, comparative statements and trend statements.
The firm’s strength and weakness can be understood with the help of financial
ratios. The strength of the firm is its ability to raise long term funds and its liquidity and
the weakness are low profit margin and its inefficiency in utilizing its resources.
The major suggestion put forward is to reduce the excessive investment in current
asset and inventory. It has to increase creditor’s payment period to enhance the efficiency.
Financial analysis is a continuous process. The scope for financial analysis for the
firm is wide. Financial analysis must be done regularly to understand the changing trend
of CAMPCOs performance and the strength and weakness of the firm, and to take decision
accordingly.

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 BIBLIOGRAPHY

 http://www.iosrjournals.org/iosr-jbm/papers/Vol16-issue6/Version-1/M01661

 www.scribd.com/doc/8179250
 www.academia.edu
 www.researchgate.net
 www.wikipedia.com
 http://shodhganga.inflibnet.ac.in/0603/70

 Management accounting –Himalaya publishing house by M.N. Arora

 Financial management – Kalyani publisher by R.K. sharma and shashi K. Gupta

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