~1~

~2~
 ~3~

I would like to express my special

thanks of gratitude to my teacher Mr.
PK Sahu as well as our principal Mrs.
Rajani Shekhar for giving me the golden
opportunity to do this wonderful
project which also helped me in doing a
lot of Research and I came to know
about so many new things I am really
thankful to them.
Secondly I would also like to thank my
parents and friends who helped me a lot
in finalizing this project within the
limited time frame.
 ~4~

TOPIC PAGE NO
Accounts Project 1
Topic 2
Acknowledgement 3
Content 4
Introduction 5-16
Case Study 17-26
Ratio Analysis 27-29
Pie chart 30-37
Conclusion 38
Bibliography 39
 ~5~

Financial Statements are the end

products of accounting process. They
provide information about the
profitability and financial position of a
business. An Income Statement or
Profit and Loss Account is one of the
financial statements of a company and
shows the company's revenues and
expenses during a particular period. It
indicates how the revenues are
transformed into the net income or net
profit. The purpose of the income
statement is to show managers and
investors whether the company made
profit or loss during the period being
 ~6~

reported. An income statement

represents a period of time.
In financial accounting,a Balance Sheet
is a summary of the financial balances
of an individual or organization or other
organization such as government or not-
for-profit entity. Assets, liabilities and
ownership equity are listed as of a
specific date, such as the end of its
financial year. A balance sheet is often
described as a "snapshot of a company's
financial condition". Of the four basic
financial statements, the balance sheet
is the only statement which applies to a
single point in time of a business'
calendar year.
 ~7~

Financial Statements contain absolute

figures of assets, liabilities, revenues,
expenses and profit and loss of an
enterprise. They are readily
understandable to their users. Owners,
managers, bankers and others all
require specialized information that is
not directly provided by standard
financial statements. The analysis of
financial statements is a process of
identifying the financial strengths and
weaknesses of the company by properly
establishing relationships between the
items of the balance sheet and profit
and loss account.
 ~8~

● To determine the short term

liquidity and long term solvency of
the company.
● To estimate the earning capacity
of the company.
● To determine the borrowing
capacity of the company.
● To measure the financial position
and performance of the company.
 ~9~

● Comparative financial
statements and common size
financial statements.
● Cash flow analysis.
● Ratio analysis.

● External analysis – This analysis is

made by the parties who are outsiders
for the business. These parties are
investors, banks, creditors etc. These
parties do not have access to the
 ~ 10 ~

detailed internal records of the

business and hence their analysis is
based on published financial
statements.
● Internal analysis – This analysis is
made by the persons who have access to
the detailed internal records of the
business. Such an analysis can be
performed by the executives of the
organisation.
● Horizontal analysis –In such a type of
analysis, financial statements for a
number of years are reviewed and
analysed. Such an analysis indicates the
increase ordecrease in items not only in
absolute figures but also in percentage
form.
 ~ 11 ~

● Vertical analysis – In such a type of

analysis, financial statements for a
single year or on a particular date are
reviewed and analysed with the help of
proper devices like ratios. It involves a
study of the quantitative relationship
among various items of balance sheet
and profit or loss account of a single
period.

Statements in which two or more

year’s financial data are shown in
single parallel columns for each year
are called Comparative Financial
Statements. Comparative
 ~ 12 ~

statements may show assets,

liabilities and equities or revenues
and expenses of two or more year of
the same business or of different
businesses in the industry.

● It helps to analysis and evaluation of the

performance of an enterprise by comparing two
or more periods or by comparing two or more
enterprises.
● It indicates changes in the terms of money
value as well as in terms of percentage.
● It helps management to take proper decisions
about crucial financial matters.
 ~ 13 ~

● Inter firm comparison may give

misleading results if accounting
concepts and convention are not
properly followed.
● Changes in the price level reduce the
importance of comparative financial
statement as a tool for financial
analysis.
● It cannot effectively compare
companies of different sizes.
 ~ 14 ~

A common size income statement is an

income statement in which each line
item is expressed as a percentage of
the value of revenue or sales. It is used
for vertical analysis, in which each line
item in a financial statement is
represented as a percentage of a base
figure within the statement.
Common size financial statements help
to analyze and compare a company's
performance over several periods with
varying sales figures. The common size
percentages can be subsequently
compared to those of competitors to
determine how the company is
performing relative to the industry.
 ~ 15 ~

● It is useful for inter firm

comparisons because such
statements make it possible to
compare companies of different
sizes.
● It is useful for inter firm
comparisons because such
statements show the relative
changes in the assets and liabilities
of a company as well as relative
changes in the components of profit
and loss statements in relation to
revenue from operations of
different periods.
 ~ 16 ~

● It does not take into

consideration changes in the price
level.
● It does not consider qualitative
factors.
● It is not possible to make
segment wise analysis with the
help of common size statements.
 ~ 17 ~

Prepare Comparative and Common

Size Statements of Profit and Loss
from the following information:
1) Particulars 31.03.2020 31.03.2019
Revenue from 60,00,000 40,00,000
operations
Other Income 2,00,000 1,00,000

Cost of 5,00,000 3,00,000

Materials
consumed
Employee 3,00,000 2,50,000
benefit
expenses
Finance cost 6,00,000 4,00,000

Other 10,00,000 7,50,000

expenses
Tax rate 50% 50%
 ~ 18 ~

Rs Rs Rs %
I.Revenue 60,00,000 40,00,000 20,00,000 100
from
operations
II.Other 2,00,000 1,00,000 1,00,000 100
Income
III.Total 62,00,000 41,00,000 21,00,000 51.22
Revenue
IV.Expenses: 5,00,000 3,00,000 2,00,000 66.67%
Cost of
materials
consumed
Employee 3,00,000 2,50,000 50,000 20.00
benefit
expenses
Finance cost 6,00,000 4,00,000 2,00,000 50.00
 ~ 19 ~

Other 10,00,000 7,50,000 2,50,000 33.33

Expenses
Total 24,00,000 17,00,000 7,00,000 41.17
Expenses
V.Profit 38,00,000 24,00,000 14,00,000 58.33
before Tax
VI.Tax 19,00,000 12,00,000 7,00,000 58.33

VII.Profit 19,00,000 12,00,000 7,00,000 58.33

after Tax

COMMON STATEMENT OF PROFIT

& LOSS
for the years ended 31st March 2020
and 2019
Particulars Note Absolute Percentage
no Amount of revenue
from
operations
2019-20 2018-19 2019-20 2018-
19
 ~ 20 ~

I.Revenue 60,00,000 40,00,000 100 100

from
operations
II.Other 2,00,000 1,00,000 3.33 2.5
Income
III.Total 62,00,000 41,00,000 103.33 102.5
Revenue
IV.Expenses: 5,00,000 3,00,000 8.33 7.5
Cost of
materials
consumed
Employee 3,00,000 2,50,000 5 6.25
benefit
expenses
Finance cost 6,00,000 4,00,000 10 10

Other 10,00,000 7,50,000 16.67 18.75

Expenses
Total 24,00,000 17,00,000 40 42.5
Expenses
V.Profit 38,00,000 24,00,000 63.33 60
before tax
VI.Tax 19,00,000 12,00,000 31.67 30

VII.Profit 19,00,000 12,00,000 31.67 30

after Tax
 ~ 21 ~

2) Give below is the Balance Sheet of

Pranchal Ltd. Prepare Comparative
and Common Size Balance Sheet from
the given information:
Particulars Note 31.03.2020 31.03.2019
no
I.EQUITY AND Rs Rs
LIABILITIES
1)Shareholder’s
fund
a)Share Capital 30,00,000 25,00,000

b)Reserve and 10,00,000 9,00,000

Surplus
2)Non-current
liablities
a)Long term 6,00,000 4,00,000
borrowings
3)Current
liabilities
a)Trade payble 4,00,000 2,00,000
 ~ 22 ~

Total 50,00,000 40,00,000

II.Assets:

1)Non-current
Assets
Fixed asstes: 25,00,000 20,00,000
a)Tangible Assets
b)Intangible 5,00,000 4,00,000
Assets
2)Current Assets 7,00,000 6,00,000
a)Trade
Receivable
b)Cash 13,00,000 10,00,000

Total 50,00,000 40,00,000

 ~ 23 ~

Particulars No 2020 2019 Absolute Percen-

te changes tage
No.
I.Equity
and
Liabilities
1)Shareholder’s
Fund
a)Share Capital 30,00,000 25,00,000 5,00,000 20%
b)Reserve and
Surplus 10,00,000 9,00,000 1,00,000 11.11%
2)Non-current
Liabilities
a)Long term
borrowings 6,00,000 4,00,000 2,00,000 50%

3)Current
liabilities
a)Trade Payble 4,00,000 2,00,000 2,00,000 100%
 ~ 24 ~

Total 50,00,000 40,00,000 10,00,000 25%

II.Assets
1)Non-current
Assets
Fixed Assets
a)Tangible 25,00,000 20,00,000 5,00,000 25%
Assets
b)Intangible 5,00,000 4,00,000 1,00,000 25%
Assets
2)Current
Assets
a)Trade 7,00,000 6,00,000 1,00,000 16.67%
Receivable
b)Cash 13,00,000 10,00,000 3,00,000 30%

Total 50,00,000 40,00,000 10,00,000 25%

 ~ 25 ~

Particulars Note Absolute Percen-

No. Amounts Tage of
Balance
sheet
total
2020 2019 2020 2019
I.EQUITY AND Rs Rs % %
LIABILITIES
1)Shareholder’s
Fund
a)Share capital 30,00,000 25,00,000 60 62.5
b)Reserve and 10,00,000 9,00,000 20 22.5
Surplus
2)Non-current
liabilities
a)Long term 6,00,000 4,00,000 12 10
borrowings
3)Current
liabilities
a)Trade Payble 4,00,000 2,00,000 8 5
 ~ 26 ~

Total 50,00,000 40,00,000 100 100

II.ASSETS
1)Non-current
Assets
Fixed Assets:
a)Tangible
Assets 25,00,000 20,00,000 50 50

b)Intangible 5,00,000 4,00,000 10 10

Assets
2)Current
Assets
a)Trade 7,00,000 6,00,000 14 15
Receivable
b)Cash 13,00,000 10,00,000 26 25

Total 50,00,000 40,00,000 100 100

 ~ 27 ~

CURRENT ASSETS
CURRENT LIABILITIES
=16,00,000
2,00,000
=8:1

Net revenue from operations

Working capital
=40,00,000
14,00,000
=2.86 times
Equity
Total Assets
 ~ 28 ~

=34,00,000
40,00,000
=17:20

Net Profit after tax x 100

Revenue from operations
=12,00,000 x 100
40,00,000
=30%

CURRENT ASSETS
CURRENT LIABILITIES
=20,00,000
4,00,000
=5:1
 ~ 29 ~

Net revenue from operations

Working capital
=60,00,000
16,00,000
=3.75 times
Equity
Total Assets
=30,00,000
50,00,000
=3:5

Net Profit after tax x 100

Revenue from operations
=19,00,000 x 100
60,00,000
=31.67%
 ~ 30 ~

10%
5%

Non current liabilities

Current liabilities
Shareholder's fund

85%
 ~ 31 ~

ASSETS

40%

Current Assets
60% Non-current Assets
 ~ 32 ~

Other income
2%

Revenue from operations

98%

Other income Revenue from operations

 ~ 33 ~

EXPENSES

15%

44%
18%
Employee benefit expenses
Cost of materials consumed
Finance cost
Other Expenses
23%
 ~ 34 ~

LIABILITIES

8%

12%

Shareholder's fund
Non current liabilities
Current liabilities
80%
 ~ 35 ~

ASSETS

44%
Non current assets
56%
Current assets
 ~ 36 ~

REVENUE

3%

Revenue from operations

Other Income

97%
 ~ 37 ~

EXPENSES

21%

42%

12% Cost of materials consumed

Employee benefit expenses
Finance cost
Other Expenses
25%
 ~ 38 ~

CONCLUSION
This project was of great help to
me. While doing this project, I
learnt many things. I learnt how
to make balance sheets and
income statements by using tools
of financial statement analysis. I
also learnt to make ratio analysis
by using the balance sheet and
income statements. This project
was really beneficial and
knowledgeable.
 ~ 39 ~

Books referred: ISC

Accountancy
Sites
referred:www.wikipedia.com