Raju plastic container

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In our present day economy “FINANCE” us defined as the provision of money at the
time when it is required. Every enterprise whether big medium or small needs finance to carvy
on its operations to achieve its targets.
Finance is the life blood and nerve system of any business organization. Financial
statements are prepared primarily for decision making. They play a dominate role in setting the
frame work of management decisions. Financial analysis is the process of evaluating the
relationship between component parts of financial statement to obtain a better understanding of
firm’s positions and performance.
Financial Statement:
A financial statement is an organized collection of data according to logical and
consistent accounting procedures. Its purpose is to convey on understanding of some financial
aspects of a business firm. It may show a position oat a moment of time as in the case of a
balance sheet.
It may reveal a series of activities over a given period of time, as in a case of an income
statement.
Thus, the term financial statement generally refers to the basis statements,
i) The income statement
ii) The balance sheet
iii) A statement of retained earnings
Financial statements analysis:
In the process of identifying the financial strength and weakness of a firm from the
available accounting data and financial statement. The analysis is done by properly establishing
the relationship between the items of balance sheet and profit and loss account. The financial
analysis is the process of selection relating and evaluation of data / information.

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This studying contain following analysis:-
 Comparative analysis statement
 Common size analysis statement
 Ratio analysis
 Trend analysis
Definitions:
“Financial statements are the products of financial accounting prepared by the accountant
the result of its activities and an analysis of what has been with earnings”
 SMITH ASHBURNE
“The analysis and interpretation of financial statement reveal each and every aspect
regarding the well bringing financial soundness., operational efficiency of the concerned”.
 JOHN MYER
Financial analysis refers to the process of critical examination of financial information
contained in the financial statement in order to understand and make decisions regarding the
operations of the firm. This process of dissection establishing and identifying the financial
weakness and strength of the firm. It indicates two aspects of the firm i.e. the profitability and
financial position.
HYPOTHESIS:
 H1 accept. The financial position of company is increasing.
 H0 accept. The financial position of company is detraining.

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NEED OF STUDY:
Financial statement analysis is used to identify the trends and relationship between
financial statement items. Both internal management and external users of financial statements
need to evaluate companies’ profitability, liquidity and solvency. The most common methods
used for financial statement analysis and trend analysis are common size statement, and ration
analysis. These methods include calculation and comparison of the results to historical company
data.
BENEFITS OF THE STUDY:
 The owner provides fund from operations of a business
 The creditors can know the financial position of concern before giving loans.
 Prospective investors who want to invest money in a firm would like to make an analysis
of financial statements.
SCOPE OF THE STUDY:
 The main scope of study is to find out financial performance of firm for past five years.
 Annual renewals and filling contractor licenses have been made to know the performance
of business. The financial authorities can use this for evaluate their performance in future.
Which will help to analyze the financial statements? The present study attempts to
develop a trend analysis model for sales and profitability.
FUNCTIONS OF THE STUDY:
 It helps to know the future earning capacity or profitability of concern
 The short term and long term solvency of concern can be known
 A possibility of developments in the future by forecasting and prepare budgets.

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OBJECTIVES AND METHODOLOGY
OBJECTIVES OF THE STUDY:
 To know the borrowing as well as liquidity position of a company
 To study the balance of cash and credit in the organization
 To study the profit of the business and net sales of the business
 To examine the solvency of the firm
 To know the financial position of company by studying the ratios.
 To predict the profitability and growth of the firm
 To identify the reasons for changes in profitability
RESEARCH METHODOLOGY:
Methodology refers to the process of collection of required data. The collection of adata
can be classified into two categories
 Primary data
 Secondary data
PRIMARY DATA:
Primary data is the first hand information. The company data is collected directly primary
data permits to facts, knowledge, opinion and intension. The basic means of a primary data are
communication and observation. Communication involves questions of respondent to get the
desired information using data collection called.
SECONDARY DATA:
The data collected from published sources not collected for the first time is called
secondary data. The secondary data is already gathered and available data before going for
primary data collection and the researcher has to first consider the secondary data. Because data
is readily available and relativity quick.

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PERIOD OF STUDY:
The period of any research is the period for which the data has been collected and
analyzed the period of this study has been limited to five financial years starting from 01-04-
2010 to 31-03-2015. The project duration was over a period of the 45 days.
THE DATA COLLECTION INCLUDES:
 Data collected from annual reports of “RAJU PLASTIC CONTAINERS”
 Reference from text books relating to financial management.
CONCEPT OF FINANCIAL STATEMENT ANALYSIS:
The concept of financial statement analysis is based on mainly two aspects.
CURRENT ASSETS CURRENT LIABILITIES
 Cash in hand / at bank
 Bills receivable
 Sundry debtors
 Short term loans
 Temporary investment
 Accrued incomes
 Bills payable
 Sundry creditor
 Outstanding expenses
 Bank over draft
 Accrued expenses
METHODS OF FINANIAL STATEMENT ANALYSIS:
The analysis an interpretation of financial statements is used to determine the financial
position and results of operation as well.
The following methods of analysis are generally used:-
1. Comparative statement
2. Common size statement
3. Trend analysis
4. Ratio analysis
5. Funds flow analysis
6. Cash flow analysis

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COMPARATIVE STATEMENT:
Comparative financial statements are those statements which have been designed in a
way so as to provide time perspective to the consideration of various elements of financial
position embodied in such statements. In this statement figures of two or more periods are placed
side by side to facilitate comparison.
But the income statement and balance sheet can be prepared in form of comparative
financial statement.
COMPARATIVE INCOME STATEMENT:
A comparative income statement shows the absolute figures for two or more periods and
the absolute change from one period to another period. The income statement discloses net profit
or net los an account of operations. Since the figures are shown side by side the reader can
quickly ascertain that sales have increased or decreased. It is calculated as
𝐴𝐵𝑆𝑂𝐿𝑈𝑇𝐸 𝐶𝐻𝐴𝑁𝐺𝐸
𝐵𝐴𝑆𝐸 𝑌𝐸𝐴𝑅
× 100
COMPARATIVE BALANCE SHEET:
Comparative balance sheet shows as one or two or more dates can be used for comparing
assets and liabilities and finding out any increase or decrease in those items. Thus, while in a
single balance sheet the emphasis in a present position, it is on change in the comparative
balance sheet. Such a balance sheet is very useful in studying the trends in an enterprise.
GUIDELINES FOR INTERPRETATION OF COMPARATIVE BALANCE
SHEET:
While interpretation comparative balance sheet the interpreter is on expected to study the
following aspects
1. Current financial position and liquidity position
2. Long term financial position
3. Profitability of the concern

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It is calculated as
𝐴𝐵𝑆𝑂𝐿𝑈𝑇𝐸 𝐶𝐻𝐴𝑁𝐺𝐸
𝐵𝐴𝑆𝐸 𝑌𝐸𝐴𝑅
× 100
COMPARATIVE FINANCIAL STATEMENT – ADVANTAGES:
The comparative financial statements are useful for analysis of the following
1. Comparative statement indicates trend in sales. Cost of production , profits etc… and
help the analyst to evaluate the performance of company
2. Comparative statements can also be used to compare the performance of the firm with the
average performance of the industry or inter firm comparison
WEAKNESS:
The comparative financial statements suffer with following weaknesses
1. Inter firm comparison can be misleading if the firms are not identical in size
2. It can also mislead, if the period has witnessed changed in accounting policies.
3. There can also be problem with different accounting procedures with regard to
depreciation inventory valuation etc..
COMMON SIZE STATEMENTS:
The common size statements balance and income statements are shown in analytical
percentage. The figures are shown as percentage of total assets liabilities and total sales. The
total assets are taken as hundred and different assets are expressed as a percentage of the total.
Similarly various liabilities are taken as a part of total liabilities. These statements are also
known as component percentage of hundred percent statements because every individual item is
stated as a percentage of total hundred.

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COMMON SIZE INCOME STATEMENT:
In common size income statement, the sales figure is taken as hundred and all other
figures of cost and expenses are expressed as percentage to sale when other cost and expenses
are reduced from sale figure of hundred. The balance figures is taken as net profit this reveals the
efficiency of the firm in generating revenue which leads to profitability and we can make
analysis of different components.
COMMON SIZE BALANCE SHEET:
In common size balance sheet, the total of assets side or liabilities is taken as hundred and
all figures of assets and liabilities, capital reserve are expressed as a proportion of the total that is
hundred. It reveals the proportion of fixed assets to current assets composition of fixed assets and
current assets and composition of current liabilities.
TREND ANALYSIS:
The financial statements may be analyzed by computing trends of series of information.
This method determines upwards or downwards and involves the computation of the percentage
relationship that each statement item leaves to same item in base year. The information for
number of years are taken up and one generally the first year is taken as the base year.
FUNDS FLOW ANALYSIS:
This statement is prepared in order to know clearly the various sources where from the
funds are procured to finance the activities of a business concern during the accounting period
and also bring to highlight the uses of these funds.
CASH FLOW ANALYSIS:
This statement is prepared to known clearly the various items of inflow and out flow of
cash. It is an essential tool for the short term financial analysis and is very helpful in the
evaluation of current liquidity of business concern.

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RATIO ANALYSIS:
It is done to develop meaningful relationship between individual items or groups of items
usually shown in periodical financial statements published by the concern an accounting ration
shows the relationship between the two interrelated accounting figures as gross profit to sale
current asset to current liabilities loaned capital to own capital etc. ratio should not be calculated
between the unrelated figures as sales and discount on issue of shares operating costs & equity
capital etc..
COST VOLUME PROFIT ANALYSIS:
According to the terminology of cost accounting of the institute of cost and management
accountants, marginal cost represents the amount of any given volume of out put is increased by
one unit . in this context a unit may be single article a batch of articles and order a stage of
production capacity, a man noun a process or a department.

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SIGNIFICANCE OF FINANCIAL STATEMENT ANALYSIS:
Financial statement analysis is a significance business activity because a corporations
financial statement provides useful information on its economic standing profit levels. These
statements also help an investor, a regulator or a company top management understanding
operating data, evaluate cash receipts and payments during a period and a price owners
investment in the company.
Figure No. 1
SIGNIFICANCE
OF FINANCIAL
STATEMENTS
FINANCIAL
POSITION
INCREASES
EFFICIENCY
EXACT
VALUEOF
DEBT
EASYLOAN
FROM
BANKS
FLEXIBILITY
OF
BUSINESS
INCREASES
DEBT
CAPACITY
PROVIDES
EXACT
VALUEOF
FUNDS
DETERMINE
VALUEOF
FIRM

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FACTORS ASSOCIATED WITH FINANCIAL CAPABILITY:
Every financial capability is effected by some of the factors in the organization some of
them or categorized here.
Figure No. 2
Insufficient income was regarded as major component to develop financial capability. It
is an effect on a self esteem and self belief.
CATEGORY
ATTITUDES
MONEY
MANAGMENT
SPENDING
DESIRE FOR
CHANGE
PLANNING
HORIZON
NORMATIVE
INFLUENCE
iNFLUENCE OF
PARTNER,
FAMILY
MENTOR
SOCIAL
EXPECTATIONS
BACK GROUND FACTORS
GENDER
INCOME
HEALTH
LIFE CHANGING
EVENTS
ACCESS TO
CREDIT

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DETERMINANTS OF FINANCIAL ANALYSIS:
The determinants of financial statement analysis of firm is the form of measures of
individual relationship in models linking various hypothesized casual wearable’s to various
performance measures. The casual variables usually describe some combination of elements of
environment.
Figure No. 3
FINANCIAL
ABILITY
GROWTH/
REDUCTION
ENVIRONEMNET
• Industry Concentration
• Industry growth
• Industry Size
• Industry exports
STRATEGY
•Growth
•Market Share
•Debt
•Researchand
Development
ORGANIZATION
Capacity
Utilization

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FINANCIAL STATEMENTS IN TERMS OF 5 COMPONENTS:
1. Cash & Equivalents: A good cash budgeting and forecasting systems provides answers
to key questions such as it is the cash level adequate to meet current expenses as they
come due? When & how much bank borrowing will be needed to meet any cash
shortfalls? When will be repayment expected?
2. Amortization: Repayment of loan principal and interest a loan can be amortized in
several ways in including (a) in equal installments of amortization, where the interest
component of the payment reduces as the principal is paid down. (b) in regular payment
of varying amounts, often called “commercial Amortization which results from paying of
a constant principal each installment plus interest on the amount of principal owd”.
3. Assets: An item of current or future economic benefit to an organization. Examples cash,
short terms investments, accounts receivable, grants receivable, inventories, prepaid
expenses, buildings, furniture’s and long term investments.
4. Audit: A financial statement as of a certain date, usually covering a 12 month period,
prepared by certified public accountant (CPA), that includes an opinion letter ,a statement
of financial position(Balance sheet), a statement of activities (Income statements). A
auditor can have an unqualified opinion, stating that the organization appears to have
followed all accounting rules.
5. Depreciation: A non cash expense associated with reducing a fixed asset book value due
to general wear and tear over its defined accounting or useful life. Depreciation is only an
approximation of the amount needed to replace fixed assets.

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STRUCTURE OF FINANCIAL STATEMENT ANALYSIS:
Figure No. 4
STATEMENT
OF CASH
FLOWS
INCOME
STATEMENT
BALANCE
SHEET
STATEMENT
OF OWNERS
EQUITY
BALANCE
SHEET

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Figure No. 5
BUSINESS
TRIATS
EFFICIENCY
LIQUIDIDTY
PROFIBITABILITY
COMPENTENCY

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Financial statement analysis (or financial analysis) the process of understanding the
risk and profitability of a firm (business, sub-business or project) through analysis of reported
financial information, particularly annual and quarterly reports.
Financial statement analysis consists of
1) Reformulating reported financial statements,
2) Analysis and adjustments of measurement errors, and
3) Financial ratio analysis on the basis of reformulated and adjusted financial statements. The
two first steps are often dropped in practice, meaning that financial ratios are just calculated on
the basis of the reported numbers, perhaps with some adjustments. Financial statement analysis
is the foundation for evaluating and pricing credit risk and for doing fundamental company
valuation.
1. Financial statement analysis typically starts with reformulating the reported financial
information. In relation to the income statement, one common reformulation is to divide
reported items into recurring or normal items and non-recurring or special items. In this
way, earnings could be separated in to normal or core earnings and transitory earnings.
The idea is that normal earnings are more permanent and hence more relevant for
prediction and valuation. Normal earnings are also separated into net operational profit
after taxes (NOPAT) and net financial costs. The balance sheet is grouped, for example,
in net operating assets (NOA), net financial debt and equity.
2. Analysis and adjustment of measurement errors question the quality of the reported
accounting numbers. The reported numbers can for example be a bad or noisy
representation of invested capital, for example in terms of NOA, which means that the
return on net operating assets (RNOA) will be a noisy measure of the underlying
profitability (the internal rate of return, IRR). Expensing of R&D is an example when
such investment expenditures are expected to yield future economic benefits, suggesting
that R&D creates assets which should have been capitalized in the balance sheet. An
example of an adjustment for measurement errors is when the analyst removes the R&D
expenses from the income statement and put them in the balance sheet. The R&D

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expenditures are then replaced by amortization of the R&D capital in the balance sheet.
Another example is to adjust the reported numbers when the analyst suspects earnings
management.
3. Financial ratio analysis should be based on regrouped and adjusted financial statements.
Two types of ratio analysis are performed: 3.1) Analysis of risk and 3.2) analysis of
profitability:
a. Analysis of risk typically aims at detecting the underlying credit risk of the firm.
Risk analysis consists of liquidity and solvency analysis. Liquidity analysis aims
at analyzing whether the firm has enough liquidity to meet its obligations when
they should be paid. A usual technique to analyze illiquidity risk is to focus on
ratios such as the current ratio and interest coverage. Cash flow analysis is also
useful. Solvency analysis aims at analyzing whether the firm is financed so that it
is able to recover from a loss or a period of losses. A usual technique to analyze
insolvency risk is to focus on ratios such as the equity in percentage of total
capital and other ratios of capital structure. Based on the risk analysis the
analyzed firm could be rated, i.e. given a grade on the riskiness, a process called
synthetic rating. Ratios of risk such as the current ratio, the interest coverage and
the equity percentage have no theoretical benchmarks. It is therefore common to
compare them with the industry average over time. If a firm has a higher equity
ratio than the industry, this is considered less risky than if it is above the average.
Similarly, if the equity ratio increases over time, it is a good sign in relation to
insolvency risk.
b. Analysis of profitability refers to the analysis of return on capital, for example
return on equity, ROE, defined as earnings divided by average equity. Return on
equity, ROE, could be decomposed: ROE = RNOA + (RNOA - NFIR) * NFD/E,
where RNOA is return on net operating assets, NFIR is the net financial interest
rate, NFD is net financial debt and E is equity. In this way, the sources of ROE
could be clarified. Unlike other ratios, return on capital has a theoretical
benchmark, the cost of capital - also called the required return on capital. For
example, the return on equity, ROE, could be compared with the required return
on equity, kE, as estimated, for example, by the capital asset pricing model. If

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ROE < kE (or RNOA > WACC, where WACC is the weighted average cost of
capital), then the firm is economically profitable at any given time over the period
of ratio analysis. The firm creates values for its owners. Insights from financial
statement analysis could be used to make forecasts and to evaluate credit risk and
value the firm's equity. For example, if financial statement analysis detects
increasing superior performance ROE - kE > 0 over the period of financial
statement analysis, then this trend could be extrapolated into the future. But as
economic theory suggests, sooner or later the competitive forces will work - and
ROE will be driven toward kE.
A financial statement (or financial report) is a formal record of the financial activities
of a business, person, or other entity. In British English—including United Kingdom company
law—a financial statement is often referred to as an account, although the term financial
statement is also used, particularly by accountants.
For a business enterprise, all the relevant financial information, presented in a structured
manner and in a form easy to understand, are called the financial statements. They typically
include four basic financial statements, accompanied by a management discussion and analysis:
1. Statement of Financial Position: also referred to as a balance sheet, reports on a
company's assets, liabilities, and ownership equity at a given point in time.
2. Statement of Comprehensive Income: also referred to as Profit and Loss statement (or a
"P&L"), reports on a company's income, expenses, and profits over a period of time. A
Profit & Loss statement provides information on the operation of the enterprise. These
include sale and the various expenses incurred during the processing state.
3. Statement of Changes in Equity: explains the changes of the company's equity
throughout the reporting period
4. Statement of cash flows: reports on a company's cash flow activities, particularly its
operating, investing and financing activities.

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For large corporations, these statements are often complex and may include an extensive
set of notes to the financial statements and explanation of financial policies and management
discussion and analysis. The notes typically describe each item on the balance sheet, income
statement and cash flow statement in further detail. Notes to financial statements are considered
an integral part of the financial statements.
Purpose of financial statements by business entities:
"The objective of financial statements is to provide information about the financial
position, performance and changes in financial position of an enterprise that is useful to a wide
range of users in making economic decisions." Financial statements should be understandable,
relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are
directly related to an organization's financial position.
Financial statements are intended to be understandable by readers who have "a
reasonable knowledge of business and economic activities and accounting and who are willing to
study the information diligently." Financial statements may be used by users for different
purposes:
 Owners and managers require financial statements to make important business decisions
that affect its continued operations. Financial analysis is then performed on these
statements to provide management with a more detailed understanding of the figures.
These statements are also used as part of management's annual report to the stockholders.
 Employees also need these reports in making collective bargaining agreements (CBA)
with the management, in the case of labor unions or for individuals in discussing their
compensation, promotion and rankings.
 Prospective investors make use of financial statements to assess the viability of investing
in a business. Financial analyses are often used by investors and are prepared by
professionals (financial analysts), thus providing them with the basis for making
investment decisions.
 Financial institutions (banks and other lending companies) use them to decide whether to
grant a company with fresh working capital or extend debt securities (such as a long-term
bank loan or debentures) to finance expansion and other significant expenditures.

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 Government entities (tax authorities) need financial statements to ascertain the propriety
and accuracy of taxes and other duties declared and paid by a company.
 Vendors who extend credit to a business require financial statements to assess the
creditworthiness of the business.
 Media and the general public are also interested in financial statements for a variety of
reasons.
Government financial statements:
The rules for the recording, measurement and presentation of government financial
statements may be different from those required for business and even for non-profit
organizations. They may use either of two accounting methods: accrual accounting, or cash
accounting, or a combination of the two (OCBOA). A complete set of chart of accounts is also
used that is substantially different from the chart of a profit-oriented business
Financial statements of not-for-profit organizations:
The financial statements that not-for-profit organizations such as charitable organizations
and large voluntary associations publish, tend to be simpler than those of for-profit corporations.
Often they consist of just a balance sheet and a "statement of activities" (listing income and
expenses) similar to the "Profit and Loss statement" of a for-profit. Charitable organizations in
the United States are required to show their income and net assets (equity) in three categories:
Unrestricted (available for general use), Temporarily Restricted (to be released after the donor's
time or purpose restrictions have been met), and Permanently Restricted (to be held perpetually,
e.g., in an Endowment).
Personal financial statements
Personal financial statements may be required from persons applying for a personal loan
or financial aid. Typically, a personal financial statement consists of a single form for reporting
personally held assets and liabilities (debts), or personal sources of income and expenses, or
both. The form to be filled out is determined by the organization supplying the loan or aid.

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Audit and legal implications
Although laws differ from country to country, an audit of the financial statements of a
public company is usually required for investment, financing, and tax purposes. These are
usually performed by independent accountants or auditing firms. Results of the audit are
summarized in an audit report that either provide an unqualified opinion on the financial
statements or qualifications as to its fairness and accuracy. The audit opinion on the financial
statements is usually included in the annual report.
There has been much legal debate over who an auditor is liable to. Since audit reports
tend to be addressed to the current shareholders, it is commonly thought that they owe a legal
duty of care to them. But this may not be the case as determined by common law precedent. In
Canada, auditors are liable only to investors using a prospectus to buy shares in the primary
market. In the United Kingdom, they have been held liable to potential investors when the
auditor was aware of the potential investor and how they would use the information in the
financial statements. Nowadays auditors tend to include in their report liability restricting
language, discouraging anyone other than the addressees of their report from relying on it.
Liability is an important issue: in the UK, for example, auditors have unlimited liability.
In the United States, especially in the post-Enron era there has been substantial concern
about the accuracy of financial statements. Corporate officers (the chief executive officer (CEO)
and chief financial officer (CFO)) are personally liable for attesting that financial statements "do
not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by th[e] report." Making or certifying
misleading financial statements exposes the people involved to substantial civil and criminal
liability. For example Bernie Ebbers (former CEO of WorldCom) was sentenced to 25 years in
federal prison for allowing WorldCom's revenues to be overstated by billion over five years.

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Standards and regulations:
Different countries have developed their own accounting principles over time, making
international comparisons of companies difficult. To ensure uniformity and comparbility
between financial statements prepared by different companies, a set of guidelines and rules are
used. Commonly referred to as Generally Accepted Accounting Principles (GAAP), these set of
guidelines provide the basis in the preparation of financial statements, although many companies
voluntarily disclose information beyond the scope of such requirements.
Recently there has been a push towards standardizing accounting rules made by the International
Accounting Standards Board ("IASB"). IASB develops International Financial Reporting
Standards that have been adopted by Australia, Canada and the European Union (for publicly
quoted companies only), are under consideration in South Africa and other countries. The United
States Financial Accounting Standards Board has made a commitment to converge the U.S.
GAAP and IFRS over time.
Inclusion in annual reports:
To entice new investors, most public companies assemble their financial statements on
fine paper with pleasing graphics and photos in an annual report to shareholders, attempting to
capture the excitement and culture of the organization in a "marketing brochure" of sorts.
Usually the company's chief executive will write a letter to shareholders, describing
management's performance and the company's financial highlights.
In the United States, prior to the advent of the internet, the annual report was considered
the most effective way for corporations to communicate with individual shareholders. Blue chip
companies went to great expense to produce and mail out attractive annual reports to every
shareholder. The annual report was often prepared in the style of a coffee table book.

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Moving to electronic financial statements:
Financial statements have been created on paper for hundreds of years. The growth of the
Web has seen more and more financial statements created in an electronic form which is
exchangeable over the Web. Common forms of electronic financial statements are PDF and
HTML. These types of electronic financial statements have their drawbacks in that it still takes a
human to read the information in order to reuse the information contained in a financial
statement.
More recently a market driven global standard, XBRL (Extensible Business Reporting
Language), which can be used for creating financial statements in a structured and computer
readable format, has become more popular as a format for creating financial statements. Many
regulators around the world such as the U.S. Securities and Exchange Commission have
mandated XBRL for the submission of financial information.
The UN/CEFACT created, with respect to Generally Accepted Accounting Principles,
(GAAP), internal or external financial reporting XML messages to be used between enterprises
and their partners, such as private interested parties (e.g. bank) and public collecting bodies (e.g.
taxation authorities). Many regulators use such messages to collect financial and economic
information.
In financial accounting, a balance sheet or statement of financial position is a summary
of the financial balances of a sole proprietorship, a business partnership, a corporation or other
business organization, such as an LLC or an LLP. 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.
A standard company balance sheet has three parts: assets, liabilities and ownership
equity. The main categories of assets are usually listed first, and typically in order of liquidity.
Assets are followed by the liabilities.

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Another way to look at the same equation is that assets equals liabilities plus owner's
equity. Looking at the equation in this way shows how assets were financed: either by borrowing
money (liability) or by using the owner's money (owner's equity). Balance sheets are usually
presented with assets in one section and liabilities and net worth in the other section with the two
sections "balancing."
A business operating entirely in cash can measure its profits by withdrawing the entire
bank balance at the end of the period, plus any cash in hand. However, many businesses are not
paid immediately; they build up inventories of goods and they acquire buildings and equipment.
In other words: businesses have assets and so they cannot, even if they want to, immediately turn
these into cash at the end of each period. Often, these businesses owe money to suppliers and to
tax authorities, and the proprietors do not withdraw all their original capital and profits at the end
of each period. In other words businesses also have liabilities.
Types:
A balance sheet summarizes an organization or individual's assets, equity and liabilities at
a specific point in time. We have two forms of balance sheet. They are the report form and the
account form. Individuals and small businesses tend to have simple balance sheets. Larger
businesses tend to have more complex balance sheets, and these are presented in the
organization's annual report. Large businesses also may prepare balance sheets for segments of
their businesses. A balance sheet is often presented alongside one for a different point in time
(typically the previous year) for comparison.
Personal balance sheet:
A personal balance sheet lists current assets such as cash in checking accounts and
savings accounts, long-term assets such as common stock and real estate, current liabilities such
as loan debt and mortgage debt due, or overdue, long-term liabilities such as mortgage and other
loan debt. Securities and real estate values are listed at market value rather than at historical cost.

25
A small business bump that balance sheet lists current assets such as cash, accounts
receivable, and inventory, fixed assets such as land, buildings, and equipment, intangible assets
such as patents, and liabilities such as accounts payable, accrued expenses, and long-term debt.
Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. The small
business's equity is the difference between total assets and total liabilities.
Public Business Entities balance sheet structure:
Guidelines for balance sheets of public business entities are given by the International
Accounting Standards Board and numerous country-specific organizations/company.
Balance sheet account names and usage depend on the organization's country and the type of
organization. Government organizations do not generally follow standards established for
individuals or businesses.
If applicable to the business, summary values for the following items should be included in the
balance sheet: Assets are all the things the business owns, this will include property, tools, cars,
etc.
Assets:
Current assets
1. Cash and cash equivalents
2. Accounts receivable
3. Inventories
4. Prepaid expenses for future services that will be used within a year
Non-current assets (Fixed assets)
1. Property, plant and equipment
2. Investment property, such as real estate held for investment purposes
3. Intangible assets
4. Financial assets (excluding investments accounted for using the equity method, accounts
receivables, and cash and cash equivalents)
5. Investments accounted for using the equity method

26
6. Biological assets, which are living plants or animals. Bearer biological assets are plants
or animals which bear agricultural produce for harvest, such as apple trees grown to
produce apples and sheep raised to produce wool.
Liabilities:
See Liability (accounting)
1. Accounts payable
2. Provisions for warranties or court decisions
3. Financial liabilities (excluding provisions and accounts payable), such as promissory
notes and corporate bonds
4. Liabilities and assets for current tax
5. Deferred tax liabilities and deferred tax assets
6. Unearned revenue for services paid for by customers but not yet provided
Equity:
The net assets shown by the balance sheet equals the third part of the balance sheet, which is
known as the shareholders' equity. It comprises:
1. Issued capital and reserves attributable to equity holders of the parent company
(controlling interest)
2. Non-controlling interest in equity
Formally, shareholders' equity is part of the company's liabilities: they are funds "owing"
to shareholders (after payment of all other liabilities); usually, however, "liabilities" is used in
the more restrictive sense of liabilities excluding shareholders' equity. The balance of assets and
liabilities (including shareholders' equity) is not a coincidence. Records of the values of each
account in the balance sheet are maintained using a system of accounting known as double-entry
bookkeeping. In this sense, shareholders' equity by construction must equal assets minus
liabilities, and are a residual.

27
Regarding the items in equity section, the following disclosures are required:
1. Numbers of shares authorized, issued and fully paid, and issued but not fully paid
2. Par value of shares
3. Reconciliation of shares outstanding at the beginning and the end of the period
4. Description of rights, preferences, and restrictions of shares
5. Treasury shares, including shares held by subsidiaries and associates
6. Shares reserved for issuance under options and contracts
7. A description of the nature and purpose of each reserve within owners' equity
Income statement (also referred to as profit and loss statement (P&L), revenue
statement, statement of financial performance, earnings statement, operating statement or
statement of operations) is a company's financial statement that indicates how the revenue
(money received from the sale of products and services before expenses are taken out, also
known as the "top line") is transformed into the net income (the result after all revenues and
expenses have been accounted for, also known as Net Profit or the "bottom line"). It displays the
revenues recognized for a specific period, and the cost and expenses charged against these
revenues, including write-offs (e.g., depreciation and amortization of various assets) and taxes.
The purpose of the income statement is to show managers and investors whether the company
made or lost money during the period being reported.
The important thing to remember about an income statement is that it represents a period
of time. This contrasts with the balance sheet, which represents a single moment in time.
Charitable organizations that are required to publish financial statements do not produce an
income statement. Instead, they produce a similar statement that reflects funding sources
compared against program expenses, administrative costs, and other operating commitments.
This statement is commonly referred to as the statement of activities. Revenues and expenses are
further categorized in the statement of activities by the donor restrictions on the funds received
and expended.

28
The income statement can be prepared in one of two methods. The Single Step income
statement takes a simpler approach, totaling revenues and subtracting expenses to find the
bottom line. The more complex Multi-Step income statement (as the name implies) takes several
steps to find the bottom line, starting with the gross profit. It then calculates operating expenses
and, when deducted from the gross profit, yields income from operations. Adding to income
from operations is the difference of other revenues and other expenses. When combined with
income from operations, this yields income before taxes. The final step is to deduct taxes, which
finally produces the net income for the period measured.
Usefulness and limitations of income statement:
Income statements should help investors and creditors determine the past financial
performance of the enterprise, predict future performance, and assess the capability of generating
future cash flows through report of the income and expenses.
However, information of an income statement has several limitations:
 Items that might be relevant but cannot be reliably measured are not reported (e.g. brand
recognition and loyalty).
 Some numbers depend on accounting methods used (e.g. using FIFO or LIFO accounting
to measure inventory level).
 Some numbers depend on judgments and estimates (e.g. depreciation expense depends on
estimated useful life and salvage value).
Guidelines for statements of comprehensive income and income statements of business entities
are formulated by the International Accounting Standards Board and numerous country-specific
organizations, for example the FASB in the U.S..
Names and usage of different accounts in the income statement depend on the type of
organization, industry practices and the requirements of different jurisdictions.
If applicable to the business, summary values for the following items should be included in the
income statement:

29
Operating section:
 Revenue - Cash inflows or other enhancements of assets of an entity during a period
from delivering or producing goods, rendering services, or other activities that constitute
the entity's ongoing major operations. It is usually presented as sales minus sales
discounts, returns, and allowances.Every time a business sells a product or performs a
service, it obtains revenue. This often is referred to as gross revenue or sales revenue.
 Expenses - Cash outflows or other using-up of assets or incurrence of liabilities during a
period from delivering or producing goods, rendering services, or carrying out other
activities that constitute the entity's ongoing major operations.
o Cost of Goods Sold (COGS) / Cost of Sales - represents the direct costs
attributable to goods produced and sold by a business (manufacturing or
merchandizing). It includes material costs, direct labour, and overhead costs (as
in absorption costing), and excludes operating costs (period costs) such as selling,
administrative, advertising or R&D, etc.
o Selling, General and Administrative expenses (SG&A or SGA) - consist of the
combined payroll costs. SGA is usually understood as a major portion of non-
production related costs, in contrast to production costs such as direct labour.
 Selling expenses - represent expenses needed to sell products (e.g.
salaries of sales people, commissions and travel expenses, advertising,
freight, shipping, depreciation of sales store buildings and equipment,
etc.).
 General and Administrative (G&A) expenses - represent expenses to
manage the business (salaries of officers / executives, legal and
professional fees, utilities, insurance, depreciation of office building and
equipment, office rents, office supplies, etc.).
o Depreciation / Amortization - the charge with respect to fixed assets / intangible
assets that have been capitalised on the balance sheet for a specific (accounting)
period. It is a systematic and rational allocation of cost rather than the recognition
of market value decrement.
o Research & Development (R&D) expenses - represent expenses included in
research and development.

30
Expenses recognized in the income statement should be analyzed either by nature (raw
materials, transport costs, staffing costs, depreciation, employee benefit etc.) or by function (cost
of sales, selling, administrative, etc.). (IAS 1.99) If an entity categorizes by function, then
additional information on the nature of expenses, at least, – depreciation, amortization and
employee benefits expense – must be disclosed. (IAS 1.104) The major exclusive of costs of
goods sold, are classified as operating expenses. These represent the resources expended, except
for inventory purchases, in generating the revenue for the period. Expenses often are divided into
two broad sub classifications selling expenses and administrative expenses.
Non-operating section:
 Other revenues or gains - revenues and gains from other than primary business
activities (e.g. rent, income from patents). It also includes unusual gains that are either
unusual or infrequent, but not both (e.g. gain from sale of securities or gain from disposal
of fixed assets)
 Other expenses or losses - expenses or losses not related to primary business operations,
(e.g. foreign exchange loss).
 Finance costs - costs of borrowing from various creditors (e.g. interest expenses, bank
charges).
 Income tax expense - sum of the amount of tax payable to tax authorities in the current
reporting period (current tax liabilities/ tax payable) and the amount of deferred tax
liabilities (or assets).
Irregular items:
They are reported separately because this way users can better predict future cash flows -
irregular items most likely will not recur. These are reported net of taxes.
 Discontinued operations is the most common type of irregular items. Shifting business
location(s), stopping production temporarily, or changes due to technological
improvement do not qualify as discontinued operations. Discontinued operations must be
shown separately.

31
Disclosures:
Certain items must be disclosed separately in the notes (or the statement of comprehensive
income), if material, including:
 Write-downs of inventories to net realizable value or of property, plant and equipment to
recoverable amount, as well as reversals of such write-downs
 Restructurings of the activities of an entity and reversals of any provisions for the costs
of restructuring
 Disposals of items of property, plant and equipment
 Disposals of investments
 Discontinued operations
 Litigation settlements
 Other reversals of provisions
Earnings per share
Because of its importance, earnings per share (EPS) are required to be disclosed on the face of
the income statement. A company which reports any of the irregular items must also report EPS
for these items either in the statement or in the notes.
There are two forms of EPS reported:
 Basic: in this case "weighted average of shares outstanding" includes only actual stocks
outstanding.
 Diluted: in this case "weighted average of shares outstanding" is calculated as if all stock
options, warrants, convertible bonds, and other securities that could be transformed into
shares are transformed. This increases the number of shares and so EPS decreases.
Diluted EPS is considered to be a more reliable way to measure EPS.

32
Sample income statement:
The following income statement is a very brief example prepared in accordance with IFRS. It
does not show all possible kinds of items appeared a firm, but it shows the most usual ones.
Please note the difference between IFRS and US GAAP when interpreting the following sample
income statements.
Bottom line:
"Bottom line" is the net income that is calculated after subtracting the expenses from revenue.
Since this forms the last line of the income statement, it is informally called "bottom line." It is
important to investors as it represents the profit for the year attributable to the shareholders.
After revision to IAS 1 in 2003, the Standard is now using profit or loss for the year rather than
net profit or loss or net income as the descriptive term for the bottom line of the income
statement.
Requirements of IFRS:
, the International Accounting Standards Board issued a revised IAS 1: Presentation of Financial
Statements, which is effective for annual periods beginning.
A business entity adopting IFRS must include:
 a Statement of Comprehensive Income or two separate statements comprising:
1. an Income Statement displaying components of profit or loss and
2. a Statement of Comprehensive Income that begins with profit or loss (bottom line
of the income statement) and displays the items of other comprehensive income
for the reporting period.
All non-owner changes in equity (i.e. comprehensive income ) shall be presented in either in the
statement of comprehensive income (or in a separate income statement and a statement of
comprehensive income). Components of comprehensive income may not be presented in the
statement of changes in equity.

33
Comprehensive income for a period includes profit or loss (net income) for that period and other
comprehensive income recognized in that period.
All items of income and expense recognized in a period must be included in profit or loss
unless a Standard or an Interpretation requires otherwise. Some IFRSs require or permit that
some components to be excluded from profit or loss and instead to be included in other
comprehensive income.
Items and disclosures:
The statement of comprehensive income should include:
1. Revenue
2. Finance costs (including interest expenses)
3. Share of the profit or loss of associates and joint ventures accounted for using the equity
method
4. Tax expense
5. A single amount comprising the total of (1) the post-tax profit or loss of discontinued
operations and (2) the post-tax gain or loss recognised on the disposal of the assets or
disposal group(s) constituting the discontinued operation
6. Profit or loss
7. Each component of other comprehensive income classified by nature
8. Share of the other comprehensive income of associates and joint ventures accounted for
using the equity method
9. Total comprehensive income
The following items must also be disclosed in the statement of comprehensive income as
allocations for the period:
 Profit or loss for the period attributable to non-controlling interests and owners of the
parent
 Total comprehensive income attributable to non-controlling interests and owners of the
parent

34
Plastic is a material consisting of any of a wide range of synthetic or semi-synthetic
organics that are malleable and can be molded into solid objects of diverse shapes. Plastics are
typically organic polymers of high molecular mass , but they often contain other substances.
They are usually synthetic, most commonly derived from petrochemicals , but many are partially
natural.
Plasticity is the general property of all materials that are able to irreversibly deform
without breaking, but this occurs to such a degree with this class of moldable polymers that their
name is an emphasis on this ability.
Due to their relatively low cost, ease of manufacture, versatility, and imperviousness to
water, plastics are used in an enormous and expanding range of products, from paper clips to
spaceships. They have already displaced many traditional materials, such as wood , stone , horn
and bone , leather , paper , metal, glass , and ceramic, in most of their former uses. In developed
countries, about a third of plastic is used in packaging and another third in buildings such as
piping used in plumbing or vinyl siding .
Other uses include automobiles (up to 20% plastic), furniture, and toys. In the developing
world, the ratios may be different - for example, reportedly 42% of India's consumption is used
in packaging. Plastics have many uses in the medical field as well, to include polymer implants,
however the field of plastic surgery is not named for use of plastic material, but rather the more
generic meaning of the word plasticity in regards to the reshaping of flesh.
The world's first fully synthetic plastic was bakelite , invented in New York in 1907 by
Leo Baekeland who coined the term 'plastics'. Many chemists contributed to the materials
science of plastics, including Nobel laureate Hermann Staudinger who has been called "the
father of polymer chemistry " and Herman Mark, known as "the father of polymer physics ".
The success and dominance of plastics starting in the early 20th century led to environmental
concerns regarding its slow decomposition rate after being discarded as trash due to its

35
composition of very large molecules. Toward the end of the century, one approach to this
problem was met with wide efforts toward recycling .
Etymology
The word plastic is derived from the Greek πλαστικός (plastikos ) meaning "capable of
being shaped or molded", from πλαστός ( plastos) meaning "molded". It refers to their
malleability, or plasticity during manufacture, that allows them to be cast ,pressed , or extruded
into a variety of shapes—such as films, fibers , plates, tubes, bottles, boxes, and much more.
The common word plastic should not be confused with the technical adjective plastic,
which is applied to any material which undergoes a permanent change of shape ( plastic
deformation ) when strained beyond a certain point. Aluminum which is stamped or forged, for
instance, exhibits plasticity in this sense, but is not plastic in the common sense; in contrast, in
their finished forms, some plastics will break before deforming and therefore are not plastic in
the technical sense.
History:
The development of plastics has evolved from the use of natural plastic materials (e.g.,
chewing gum , shellac) to the use of chemically modified, natural materials (e.g., natural rubber
nitrocellulose , collagen , galalite) and finally to completely synthetic molecules (e.g., bakelite ,
epoxy , Polyvinyl chloride). Early plastics were bio-derived materials such as egg and blood
proteins, which are organic polymers . In 1600 BC, Mesoamericans used natural rubber for balls,
bands, and figurines. [3] Treated cattle horns were used as windows for lanterns in the
Middle Ages . Materials that mimicked the properties of horns were developed by treating milk-
proteins (casein ) with lye.
In the 1800s, as industrial chemistry developed during the Industrial Revolution , many
materials were reported. The development of plastics also accelerated with Charles Goodyear 's
discovery of vulcanization to thermo set materials derived from natural rubber.

36
Parke sine is considered the first man-made plastic. The plastic material was patented by
Alexander Parkas , In Birmingham , UK in 1856.
It was unveiled at the 1862 Great International Exhibition in London. Parke sine won a
bronze medal at the 1862 World's fair in London. Parke sine was made from cellulose (the major
component of plant cell walls) treated with nitric acid as a solvent. The output of the process
(commonly known as cellulose nitrate or pyroxilin) could be dissolved in alcohol and hardened
into a transparent and elastic material that could be molded when heated. By incorporating
pigments into the product, it could be made to resemble ivory.
In 1897, the Hanover, Germany mass printing press owner Wilhelm Kirsches was
commissioned to develop an alternative to blackboards. The resultant horn-like plastic made
from the milk protein casein was developed in cooperation with the Austrian chemist (Friedrich)
Adolph Spitteler (1846–1940). The final result was unsuitable for the original purpose. In 1893,
French chemist Auguste Trill at discovered the means to insolubilize casein by immersion in
formaldehyde, producing material marketed asgalalith .
In the early 1900s, Bakelite , the first fully synthetic thermo set, was reported by Belgian
chemist Leo Baekeland by using phenol and formaldehyde.
After World War I, improvements in chemical technology led to an explosion in new
forms of plastics, with mass production beginning in the 1940s and 1950s (around World War
II). Among the earliest examples in the wave of new polymers were polystyrene (PS), first
produced by BASF in the 1930s, and polyvinyl chloride (PVC), first created in 1872 but
commercially produced in the late 1920s. [3] In 1923, Durite Plastics Inc. was the first
manufacturer of phenol-furfural resins. In 1933, polyethylene was discovered by Imperial
Chemical Industries (ICI) researchers Reginald Gibson and Eric Fawcett.
In 1954, Polypropylene was discovered by Giulio Natta and began to be manufactured in
1957.

37
In 1954, expanded polystyrene (used for building insulation, packaging, and cups) was
invented by Dow Chemical
Major Plastics:
Polyester (PES) – Fibers , textiles .Polyethylene terephthalate (PET) – Carbonated drinks bottles,
peanut butter jars, plastic film, microwavable packaging.
Polyethylene (PE) – Wide range of inexpensive uses including supermarket bags, plastic bottles.
High-density polyethylene (HDPE) – Detergent bottles, milk jugs, and molded plastic cases.
Polyvinyl chloride (PVC) – Plumbing pipes and guttering, shower curtains, window frames,
flooring.
Polyvinylidene chloride (PVDC) (Saran ) – Food packaging.
Low-density polyethylene (LDPE) – Outdoor furniture , siding, floor tiles, shower curtains,
clamshell packaging.
Polypropylene (PP) – Bottle caps, drinking straws, yogurt containers, appliances, car fenders
(bumpers), plastic pressure pipe systems.
Polystyrene (PS) – Packaging foam/"peanuts", food containers, plastic tableware, disposable
cups, plates, cutlery, CD and cassette boxes.
High impact polystyrene (HIPS) -: Refrigerator liners, food packaging, vending cups.
Polyamides (PA) (Nylons ) – Fibers, toothbrush bristles, tubing, fishing line , low strength
machine parts: under-the-hood car engine parts or gun frames.

38
Acrylonitrile butadiene styrene (ABS) – Electronic equipment cases (e.g., computer monitors,
printers, keyboards), drainage pipe. Polyethylene/Acrylonitrile Butadiene Styrene (PE/ABS) – A
slippery blend of PE and ABS used in low-duty dry bearings.
Polycarbonate (PC) – Compact discs , eyeglasses, riot shields , security windows, traffic lights,
lenses. Polycarbonate/Acrylonitrile Butadiene Styrene (PC/ABS) – A blend of PC and ABS that
creates a stronger plastic. Used in car interior and exterior parts, and mobile phone bodies.
Polyurethanes (PU) – Cushioning foams, thermal insulation foams, surface coatings, printing
rollers (Currently 6th or 7th most commonly used plastic material, for instance the most
commonly used plastic in cars).
Special purpose plastics:
Maleimide/Bismaleimide Used in high temperature composite materials.
Melamine formaldehyde (MF) – One of the aminoplasts, and used as a multi-colorable
alternative to phenolics, for instance in moldings (e.g., break-resistance alternatives to ceramic
cups, plates and bowls for children) and the decorated top surface layer of the paper laminates
(e.g., Formica).
Plastarch material – Biodegradable and heat resistant, thermoplastic composed of modified corn
starch.
Phenolics (PF) or ( phenol formaldehydes ) – High modulus , relatively heat resistant, and
excellent fire resistant polymer. Used for insulating parts in electrical fixtures, paper laminated
products (e.g., Formica), thermally insulation foams. It is a thermosetting plastic, with the
familiar trade name Bakelite, that can be molded by heat and pressure when mixed with a filler-
like wood flour or can be cast in its unfilled liquid form or cast as foam (e.g., Oasis). Problems
include the probability of moldings naturally being dark colors (red, green, brown), and as
thermoset it is difficult to recycle .

39
Polyepoxide (Epoxy) Used as an adhesive, potting agent for electrical components, and matrix
for composite materials with hardeners including amine , amide , and Boron Trifluoride.
Polyetheretherketone (PEEK) – Strong, chemical- and heat-resistant thermoplastic,
biocompatibility allows for use in medical implant applications, aerospace moldings. One of the
most expensive commercial polymers.
Polyetherimide (PEI) (Ultem) – A high temperature, chemically stable polymer that does not
crystallize.
Polyimide—A High temperature plastic used in materials such as Kapton tape.
Polylactic acid (PLA) – A biodegradable, thermoplastic found converted into a variety of
aliphatic polyesters derived from lactic acid which in turn can be made by fermentation of
various agricultural products such as corn starch, once made from dairy products.
Polymethyl methacrylate (PMMA) (Acrylic) – Contact lenses (of the original "hard" variety),
glazing (best known in this form by its various trade names around the world; e.g., Perspex,
Oroglas, Plexiglas), aglets, fluorescent light diffusers, rear light covers for vehicles. It forms the
basis of artistic and commercial acrylic paints when suspended in water with the use of other
agents.
Polytetrafluoroethylene (PTFE) – Heat-resistant, low-friction coatings, used in things like non-
stick surfaces for frying pans, plumber's tape and water slides. It is more commonly known as
Teflon.
Urea-formaldehyde (UF) – One of the aminoplasts and used as a multi-colorable alternative to
phenolics. Used as a wood adhesive (for plywood, chipboard, hardboard) and electrical switch
housings.

40
Furan—Resin based on Furfuryl Alcohol used in foundry sands and biologically derived
composites.
Silicone—Heat resistant resin used mainly as a sealant but also used for high temperature
cooking utensils and as a base resin for industrial paints.
Composition
Most plastics contain organic polymers. The vast majority of these polymers are based on chains
of carbon atoms alone or with oxygen, sulfur , or nitrogen as well. The backbone is that part of
the chain on the main "path" linking a large number of repeat units together. To customize the
properties of a plastic, different molecular groups "hang" from the backbone (usually they are
"hung" as part of the monomers before the monomers are linked together to form the polymer
chain). The structure of these "side chains" influence the properties of the polymer. This fine
tuning of the repeating unit's molecular structure influences the properties of the polymer.
Most plastics contain other organic or inorganic compounds blended in. The amount of additives
ranges from zero percentage (for example in polymers used to wrap foods) to more than 50% for
certain electronic applications. The average content of additives is 20% by weight of the
polymer[ citation needed] .
Many of the controversies associated with plastics are associated with the additives. Organizing
compounds are particularly toxic.
FILLERS:
Fillers improve performance and/or reduce production costs. Stabilizing additives include
fire retardants to lower the flammability of the material. Many plastics contain fillers, relatively
inert and inexpensive materials that make the product cheaper by weight.
Typically fillers are mineral in origin, e.g., chalk. Some fillers are more chemically active and
are called reinforcing agents. Other fillers include zinc oxide, wood flour, ivory dust, cellulose
and starch.

41
Plasticizers:
Since many organic polymers are too rigid for particular applications, they are blended with
plasticizers (the largest group of additives), oily compounds that confer improved theology
About the Organization:
Company Name : RAJU PLATIC CONTAINER
Established Year : 1985
Class : Private Company
Activity Type : Plastic Products Production
Registrar : Nizamabad
Nature ; Company Limited
Sub Category ; Indian Non Govt Company
Raju Plastic Container started in the year of 1985, near Sarangapur, Nizamabad. The
chairman of the company is Sri. Jassani Akbar Ali Garu & Managing Director is Sri Jassani
Ahmed Garu. Presently we are with two branches.
First branch is at Sarangapur and second branch is at Bhainsa. Recently we launched a
technique to produce oil container products.
Products of Raju Platic Containers

43
Disposable plastic bottle makingmachines
Pet Bottle Making Machines

44
Statement of Changes in Working Capital 2010-11
Particulars 2010 2011
Changes in working capital
Increase Decrease
Current Assets
Inventories
Sundry Debtors
Other Current Assets
Loans and Advances
Total (A)
Current Liabilities
Current Liabilities
Provision
Total(B)
Working Capital (A-B)
Increase in Net Working Capital
15,000
12,500
25,250
20,000
72,750
19,850
20,152
40,002
32,748
27,741
25,000
14,200
27,300
30,000
96,500
20,192
15,819
36,011
60,489
0
10,000
01,700
02,050
10,000
04,333
00342
27,741
Total 60,489 60,489 28,083 28,083

45
INTERPRETATION:
 Net working capital is increased according to previous year 2010-2011
 Current assets are increased during year 2011
 Current liabilities increase in year 2011 from 2010
 Current assets are increase and it defects current liabilities
0
20000
40000
60000
80000
100000
120000
2010
2011

46
Statement of Changes in working capital 2011-12
Increase Decrease
Current Assets
Inventories
Sundry Debtors
Loans and Advances
Total (A)
Current Liabilities
Current Liabilities
Provision
Total(B)
25000
14200
27300
30000
96500
20192
15819
36011
60489
0
32384
29210
30213
29281
121538
32915
28692
61607
59931
-558
7834
15010
2913
558
719
12723
12873
Total 60,489 60,489 26,315 26,315

47
INTERPRETATIONS:
 Networking capital decreased during the year 2011-12
 Current assets increased and current liabilities decreased
 Provisions has been increased in the year 2012
-20000
0
20000
40000
60000
80000
100000
120000
140000
2011
2012

48
Increase Decrease
Current Assets
Inventories
Sundry Debtors
Loans and Advances
Total (A)
Current Liabilities
Current Liabilities
Provision
Total(B)
32834
29210
29281
30213
121538
32915
28692
61607
59931
03541
31852
28620
32490
33183
126145
30261
32412
62673
63472
0
03209
02970
02654
00982
00590
03720
03541
Total 63,473 63,473 8,833 8,833

49
INTERPRETATIONS:
 Networking capital increased according to previous year 2012-2013
 Current assets defects current liabilities
 Provisions has been increased during year 2013
0
20000
40000
60000
80000
100000
120000
140000
2012
2013

50
Increase Decrease
Current Assets
Inventories
Sundry Debtors
Loans and Advances
Total (A)
Current Liabilities
Current Liabilities
Provision
Total(B)
31852
28620
33183
32490
126145
30261
32412
62673
63472
03891
35281
31219
34210
31201
131911
31298
33250
64548
67363
67363
03429
02599
01027
01289
01037
00838
03891
Total 67,363 67,363 7055 7055

51
INTERPRETATIONS:
 Net working capital increased in 2014
 Sundry debtors has been increased from 2013 to 2014
 Loans have been decreased in 2014 which is profitable to company.
0
20000
40000
60000
80000
100000
120000
140000
2013
2014

52
Increase Decrease
Current Assets
Inventories
Sundry Debtors
Loans and Advances
Total (A)
Current Liabilities
Current Liabilities
Provision
Total(B)
35281
31219
31201
34210
131911
31298
33250
64548
67363
00022
37815
40000
30000
39800
147615
42105
38125
80230
67385
0
02534
08781
05591
01201
10807
04875
00022
Total 67,385 67,385 16905 16905

53
INTERPRETATIONS:
 Net working capital increased in 2015
 Sundry debtors has been increased from 2014 to 2015
 Loans have been decreased in 2015 which is profitable to company.
 Provision has been increased during year 2015
0
20000
40000
60000
80000
100000
120000
140000
160000
2014
2015

54
Comparative Balance Sheet of 2010-2011
Absolute of
Change
% Of Change
1. Fixed assets
2. Investments
3. Current Assets
Inventories
Sundry Debtors
Total Current Assets
4. Total Assets (1+2+3)
5. Current Liabilities
Other Liabilities
Provision
Total Current Liabilities
6. Long Term Liabilities
Secured Loans
Unsecured Loans
Total
7. Capital Reserves
Ordinary Share Capital
Reserve & Surplus
Total Reserves
Total Liabilities (5+6+7)
38250
50000
15000
12500
25250
52750
141000
19850
20152
40002
40000
30000
70000
20442
10556
30998
141000
40000
65000
25000
14200
27300
66500
171500
20192
15819
36011
49000
25000
74000
20442
41047
61489
171500
01750
15000
10000
01700
0250
13750
30500
-342
4333
4675
-9000
5000
4000
-
30491
30491
30500
4.575
30.0
66.66
13.6
8.11
26.06
21.63
1.75
21.5
9.97
22.5
16.66
5.71
-
288.8
98.36
21.63

55
INTERPRETATIONS:
 Fixed Assets increased by 1750 with 4.5%
 Total assets increased 30500 with 21.63%
 Current liabilities decreased 4675 with 9.9%
 Total reserves are increased in 2011 by 30491
The overall financial position of RAJU PLASTIC CONTAINERS During the period of
study is satisfactory .
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2010
2011

56
Comparative Balance Sheet of 2011- 2012
Absolute of
Change
% Of Change
1. Fixed assets
2. Investments
3. Current Assets
Inventories
Sundry Debtors
Other Liabilities
Provision
Secured Loans
Unsecured Loans
Total
7. Capital Reserves
Reserve & Surplus
Total Reserves
40000
65000
25000
14200
27300
66500
171500
20192
15819
36011
49000
25000
74000
20442
41047
61489
171500
45000
50000
32834
29210
30213
92257
187257
32915
28692
61607
39500
20430
59930
20442
45278
65720
187257
5000
15000
- 7834
- 15010
-2913
25757
15757
-2723
-12873
- 25596
9500
4570
14070
-
-4231
4231
15757
12.5
23.0
31.33
105.7
10.6
38.73
9.18
63.0
81.37
71.07
19.38
18.28
19.01
-
10.30
6.88
9.18

57
INTERPRETATIONS:
 Total assets decreased by 15757 with 9.18%
 Current liabilities decreased with 71.07%
 Total liabilities and assets are equal by 9.18%
study is satisfactory.
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2011
2012

58
Absolute of
Change
% Of Change
1. Fixed assets
2. Investments
3. Current Assets
Inventories
Sundry Debtors
Other Liabilities
Provision
Secured Loans
Unsecured Loans
Total
7. Capital Reserves
Reserve & Surplus
Total Reserves
45000
50000
32834
29210
30213
92257
187257
32915
28692
61607
39500
20430
59930
20442
45278
65720
187257
52500
67000
49231
42612
38104
129947
249447
46281
39529
85810
40000
35000
75000
20442
68195
88637
249447
7500
17000
16397
13402
7891
37690
62190
13366
10837
24203
500
14570
15070
-
22917
22917
62190
16.6
34
49.93
45.88
26.11
40.85
33.21
40.60
37.77
39.28
1.26
71.3
25.14
-
250.6
250.6
33.21

59
INTERPRETATIONS:
 Inventories increased by 16397 with 49.93%
 Total assets Increased by 62190 with 33.21%
0
50000
100000
150000
200000
250000
300000
2012
2013

60
Comparative Balance Sheet of 2013 - 2014
Absolute of
Change
% Of Change
1. Fixed assets
2. Investments
3. Current Assets
Inventories
Sundry Debtors
Other Liabilities
Provision
Secured Loans
Unsecured Loans
Total
7. Capital Reserves
Reserve & Surplus
Total Reserves
52500
67000
49231
42612
38104
129947
249447
46281
39529
85810
40000
35000
75000
20442
68195
88637
249447
66000
70000
50000
49501
45200
144701
280701
50000
45000
95000
46200
40000
86200
20442
79059
99501
280701
13500
3000
769
6889
7096
14754
31254
3719
5471
9190
6200
5000
11200
10864
10864
31254
25.71
4.47
1.56
16.16
18.62
11.35
12.52
8.03
13.84
10.70
15.5
14.28
14.93
15.93
15.93
12.52

61
INTERPRETATIONS:
 Fixed assets reveals that long term sources of funds are utilized
 Long term liabilities neither decreased nor increased
0
50000
100000
150000
200000
250000
300000
2013
2014

62
Absolute of
Change
% Of Change
1. Fixed assets
2. Investments
3. Current Assets
Inventories
Sundry Debtors
Other Liabilities
Provision
Secured Loans
Unsecured Loans
Total
7. Capital Reserves
Reserve & Surplus
Total Reserves
66000
70000
50000
49501
45200
144701
280701
50000
45000
95000
46200
40000
86200
20442
79059
99501
280701
70000
80000
56000
54290
50000
160290
310290
55000
53250
108250
50000
47200
97200
20442
84398
104840
310290
4000
10000
6000
4789
4800
15589
29589
5000
8250
13250
3800
7200
11000
5339
5339
29589
6.06
14.28
12
9.67
10.61
10.77
10.54
10
18.33
13.94
8.225
18
12.76
6.75
5.365
10.54

63
INTERPRETATIONS:
 Fixed assets reveals that long term sources of funds are utilized
 Current liabilities increased by 13250 with 13.94%
 Long term liabilities increased by 11000 with 12.76%
0
50000
100000
150000
200000
250000
300000
350000
2014
2015

64
TYPES OF RATIOS:
Current Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
YEAR CURRENT ASSETS CURRENT
LIABILITIES
CURRENT RATIO
2011
2012
2013
2014
2015
66500
92257
129947
144701
160290
36011
61607
85810
95000
108250
1.846
1.497
1.514
1.523
1.480
INTERPRETATIONS:
 The above table shows calculation of current ratio for 5 years from 2011-2015
 During this period the firm has highest current ratio i.e., 1.846 in the year 2011
 Lowest current ratio is 1.480 in the year 2015
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2011 2012 2013 2014 2015
Current Ratio
Current Ratio

65
Liquid Ratio
𝐿𝑖𝑞𝑢𝑖𝑑 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝑆𝑡𝑜𝑐𝑘
YEAR CURRENT
ASSETS
INVENTORY /
STOCK
CURRENT
LIABILITIES
LIQUID
RATIO
2011
2012
2013
2014
2015
66500
92257
129947
144701
160290
25000
32834
49234
50000
56000
36011
61607
85810
95000
108250
1.152
0.964.
0.940
0.996
0.963
INTERPRETATIONS:
 The above table shows calculation of liquid ratio for 5 years from 2011-2015
 During this period the firm has highest liquid ratio i.e., 1.152 in the year 2011
 Lowest liquid ratio is 0.940 in the year 2013
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2011 2012 2013 2014 2015
Liquid Ratio
Liquid Ratio

66
ABSOLUTE LIQUID RATIO:
𝐴𝑏𝑠𝑜𝑙𝑢𝑡𝑒 𝐿𝑖𝑞𝑢𝑖𝑑 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑎𝑠ℎ, 𝑀𝑎𝑟𝑘𝑒𝑡 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠
YEAR CASH CURRENT
LIABILITIES
ABSOLUTE LIQUID
RATIO
2011
2012
2013
2014
2015
15500
20800
35600
40000
50000
36011
61607
85810
95000
108250
0.430
0.337
0.414
0.421
0.461
INTERPRETATION:
 The above table shows calculation of liquid ratio for 5 years from 2011-2015
 During this period the firm has highest Absolute liquid ratio i.e., 0.461 in the year 2015
 Lowest Absolute liquid ratio is 0.337 in the year 2012
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
2011 2012 2013 2014 2015
Liquid Ratio
Liquid Ratio

67
FINDINGS:
Present project work has been under taken on the study of financial statement analysis of
RAJU PLASTIC CONTAINER. During the analysis the following we are found out .
 It was found that in every statement of changes in working capital current assets are
increased
 There is an increase in fixed assets in every year
 Every year reserves are increased in official manner. It shows good sign for the
organization / company
 In every year investment and current assets are in good position.
 Highest current ratio is in the year 2011 i.e,, 1.846 and lowest current ratio i.e. 1.480 in
2015
 Highest liquid ratio is i.e 1.152 in 2011 and lowest 0.940 in year 2013
 In absolute liquid ratio there is an increase in year 2015 with 0.461 and decrease in the
year 2013 with 0.337
 Comparative balance sheet of the year 2013 shows liability from out siders has increased
by 25.14% and there in decrease in share capital.

68
SUGGESTIONS:
 The standard of current ration is 2:1. The firm is having the current ratio above the
standard but it is not consistent. Firm should try to manage the current ratio.
 The company is showing fluctuations in liquid ratio it needs to increase assets in order to
increase its liquidity.
 The firm should increase its ratio, because higher the ratio greater the utilization of fixed
assets where as lower ratio means under utilization of fixed assets.
 Instead of disclosing the combined flow of debtors and loans as decrease / increase in
trade and other receivables , their separate discloser will be more meaning full.

69
CONCLUSION:
The financial position of RAJU PLASTIC CONTAINERS is quite comfortable with a
judicious mix of debt and equity. The overall assessment of financial statement signifies
effective utilization of investment, loans and advances. The profitability of the company appears
to be impressive , as judged by increase in reserves and surplus.
The management discussions and analysis by directors reports and opinions expressed
auditors report through financial statements or accountant is true and fare view in accordance
with the provisions of the companies acts and according standards.
The overall financial position of RAJU PLASTIC CONTAINER appears to be more
than satisfactory

70
BIBLIOGRAPHY
REFFERED BOOKS
BERNSTEIN, L.A. Financial Statement Analysis. Richard D. Irwin, Inc., Homewood, IL. Latest
edition.
FOSTER, G. Financial Statement Analysis. Prentice Hall, Inc., Englewood Cliffs, NJ. Latest
edition.
GARCIA F.L. How To Analyze A Bank Statement. Bankers Publishing Co., Boston, MA, 1985.
GIBSON, C. H. Financial Statement Analysis, 1986.
O'MALIA, T.J. A Banker's Guide to Financial Statements, 1989.
WOELFEL, C.J. Financial Statement Analysis. Probes’ Publishing Co. Chicago, IL, 1988.
NEWS-PAPERS & JOURNALS:
BUSINESS TODAY
THE ECONOMIC TIMES
WEBSITES & SEARCHENGINES:
www.moneycontrol.com
www.financialanalysis.com
www.googlefinance.com

71
QUESTIONNAIRE
1. Profession [a]
a. Business man
b. private employed
c. Government employed
d. others
2. Marital status [b]
a. married
b. single
3. Income level of the respondents [c]
a. < 10,000Rs
b. 10000-25,000
c. 25,000-50,000
d. above 50,000
4. preferred investment plan [c]
a. Bank FD
b. ULIP
C. Mutual funds
d. Stock market
5. What type of mutual funds you prefer ? [b]
a. Debt funds
b. Equity funds
c. Hybrid funds

72
6. Risk preference in mutual funds [MF] investment plan [c]
a. High risk
b. Moderate risk
c. Low risk
7. What type of scheme you prefer much [a]
a. Open – Ended
b. Closed – Ended
8. What is your period of investment [a]
a. Long term
b. Short term
9. In which sector fund do you prefer much in estate funds [b]
a. Financial funds
b. Utility funds
c. Technology funds
d. Healthcare funds
10. Why do u prefer in investing in mutual funds [b]
a. Tax savings
b. Risk cover
c. Others

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