Chapter

FINANCIAL STATEMENT ANALYSIS
CHAPTER-1
1.1 INTRODUCTION
1
1.1 INTRODUCTION
Financial statement analysis is a critical process for evaluating the financial health and
performance of a company. By analyzing financial statements, stakeholders can make
informed decisions about investments, management strategies, and operational
improvements. Python, a powerful programming language, offers numerous libraries and
tools for financial analysis, with Matplotlib being one of the most popular for data
visualization.
Meaning Of Financial Statement Analysis: -
Financial statement analysis is the process of reviewing and interpreting a

company's financial statements includes balance sheet, income statement, and
ratios analysis to understand its financial health, performance, and company
position.
Use Python for Financial Statement Analysis:
1. Automation: Python can automate the data extraction and analysis process, saving
time and reducing errors.
2. Data Visualization: Libraries like Matplotlib allow for the creation of
detailed and interactive visualizations that make it easier to interpret
complex financial data.
Devices Of Financial Statement Analysis:
There are several methods for determining the financial analysis of the company. They are as
follows: -
1. Ratio Analysis
2. Comparative Statement
3. Common size Statement
4. Trend analysis
2
Financial Analysis can be undertaken by management of the firm or by parties

outside the firm Owners, Creditors, Investors and Others. The structure of Assets,
Liabilities and Owner's equity and so on and the Profit & Loss account shows the
results of operation during a certain period of times in terms of the revenue obtained
during a certain period of times in terms of the revenue obtained and the cost incurred
during the year.
Thus, the financial position and operational statement provides a summarized view of the
financial position and operation of the firm.
The Financial Analysis statements are thus an important aid to Financial Analysis.
The first task of the Financial Analyst is to select the information relevant to the decisions
under consideration from the total information contained in the financial statements. In the
brief Financial Analysis are the process of selection, relation and Evaluation.
3
CHAPTER-2
2.1 INDUSTRY PROFILE
2.2 COMPANY PROFILE
2.3 THEORETICAL FRAME WORK
4
2.1 INDUSTRY PROFILE
The information technology (IT) industry in India comprises Information Technology

Services and businesses process outsourcing. That share of the IT-BPM (information
technology and business processing management) sector in the GDP of India is 7.5% in fiscal
year 2023.
The IT and B P M Industries total revenue 245 billion in fiscal year 2023.
Main Players: IT Company in India
Tata Consultancy Services, Infosys Private Limited, HCL Technologies, Oracle Financial
Services and persistency system.
2.2 COMPANY PROFILE
Karthikeya Software Solutions Private Limited Is One Of The Rapidly Fastest Growing
Software Development Company Formed In Early 2014 By The Result- Oriented Managing
Partner And Cough Founder Tejaswini Bandi Has Been And Architect With Architect
Experience Under Technocratic For A Number Of Years Which Represents The Highest
Level Of Competency And Expertise With Various Modern Technology- As Well As The
Best Administration Specialist
Since Our Inception In 2014 Karthikeya's Software Solutions Is Delivering Latest Software
Development And Related Information Technology Services. We Combine Province
Methodologies Business Domain Knowledge And Technology Expertise To Deliver High
Quality Solutions. Karthikeya Solutions Value Proportion Is Supported By Our Core Values
Under Exceptional Customer Focus Which Creates Larger Business Opportunity High
Customer Loyalty And Sustainable Growth.
Company Total GDP (in Crores):

 Total Income: ₹4,333.44 Crores
 Net Sales: ₹4,229.68 Crores
 Net Profit After Tax: ₹360.99 Crores
The financial performance metrics of the company over the provided years, representing the
total GDP in terms of total income, net sales, and net profit after tax.
Company Total revenue (in crores):
5
 Company overall turnover 5 cr.

Location:
Tirupati, Andhra Pradesh.

Products and services
Karthikeya Software Solutions employs a diverse technology stack to deliver high-quality
solutions, including:
Programming Languages: Java, Python, C#, JavaScript, PHP, and Ruby.
Frameworks: Angular, React, Django, Spring, .NET, and Laravel.
Databases: MySQL, PostgreSQL, MongoDB, and Oracle.
Cloud Platforms: AWS, Azure, and Google Cloud.
DevOps Tools: Docker, Kubernetes, Jenkins, and Git.
2.3 THEEORITICAL FRAMEWORK
Quality and Certifications:
The company adheres to stringent quality standards and holds various industry certifications
that underscore its commitment to excellence:
ISO 9001: Quality Management Systems.
ISO/IEC 27001: Information Security Management.
CMMI Level 3: Capability Maturity Model Integration for software development processes.
Karthikeya Software Solutions pvt ltd
Innovation and R&D:
 Focus on emerging technologies like AI, ML, IoT, and Blockchain
 Invests in R&D to stay ahead of industry trends
Clientele:
 Diverse clients, from startups to Fortune 500 companies
 Successful projects across various domains
 Future Outlook:
 Plans for growth and expansion
 Diversifying services, entering new markets, and forging partnerships
 Focus on innovation, quality, and customer satisfaction to thrive in the competitive IT
industry.
MISSION OF KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE

LIMITED
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To empower businesses through cutting-edge technology solutions, fostering
innovation, and delivering exceptional value to our clients.
VISION OF KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE

LIMITED:
To be a global leader in IT services and software solutions, known

for our commitment to quality, innovation, and customer
satisfaction. We will maintain our dominant position in market
and enhance our presence in the overseas market by setting up
multi-location units as per business potential.
"For sustained growth, we plan to:

Expand into related businesses:
 Sustainable integration project
 Turnkey projects
 Engineering and consultancy
 Build-own-operate-transfer projects
 New areas of business
We will achieve this through:
 Staying up-to-date with the latest technology
 Collaborative team work
 Ongoing training and staff development
 Building supporting units
 Competitive pricing
Services:
1. Custom Software Development
2. Enterprise Solutions (ERP, CRM, etc.)
3. Web Application Development
4. Mobile Application Development
5. Cloud Services (migration, management, security)
6. IT Consulting
7. E-commerce Solutions
8. DevOps Services
9. Maintenance and Support
Employee Safety:
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 Employees are expected to come to work on time and use provided safety
appliances (laptops, desktops, handheld devices) depending on their role.
 Failure to use safety appliances may result in disciplinary action.
Employee Amenities:
1. Identity Card: Issued to all employees, must be worn while on duty. Replacement costs
₹50.
2. Canteen: Provides meals at concessional rates, with staggered timings for shift employees.
Free tea is supplied during shifts.
3. Medical Center: Staffed by experienced medical officers, offering:
 Medical fitness exams
 Periodical check-ups
 Emergency medical care
 Immunization programs
 First aid safety classes
 Ambulance van available
Financial Statement & Management Project:
This project analyzes the company's financial statements and balance sheets to assess its:
1. Financial soundness
2. Operational efficiency
3. Credit worthiness
Based on Kennedy and Muller's approach, this analysis provides a comprehensive
understanding of the company's financial well-being.
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CHAPTER-3
3.1 NEED OF THE STUDY
3.2 SCOPE OF THE STUDY
3.3 OBJECTIVES OF THE STUDY
3.4 RESEARCH METHODOLOGY
3.5 LIMITATIONS OF THE STUDY
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3.1 NEED OF THE STUDY:

 The study helps to know the ability of the firm to meet its current
obligations.
 The study extent to which the firm has used its long-term solvency by
borrowing funds.
 The study identifies the efficiency of the firm in utilizing its assets in
generating sales and revenue.
 Can be understood by the study overall operating efficiency and
performance of the firm.
3.2 SCOPE OF THE STUDY:
 The project covers the financial activities and performance of the company
 Financial performance covers the aspects like liquidity leverage activity and
profitability
 The project for the compare the financial statements to know the relative financial
position of the company
 Finally, python analysis also is carried out to find the trends in financial statements of
the company
3.3 OBJECTIVES OF THE STUDY:
 To evaluate the company's overall financial health and stability.
 To assess the company's liquidity, solvency, and financial leverage.
 To analyze changes in the company's financial performance over time.
 To suggest efficient financial system
3.4 RESEARCH METHODOLOGY:
1)Primary Data
 Sources: Data was primarily obtained from the finance department of the company.
2)Secondary Data
o Main source of secondary data was the annual report of Karthikeya Software
Solutions Private Limited.
 Types of Data:
o Balance sheet
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o Profit and loss account (income statements)

Sources:
o Previously compiled and published data.
o Annual reports and financial statements of the company.
 Time Period:
The study derives data from the financial years 2018-19, 2019-20, 2020-21, 2021-22,
and 2022-23.
3.5 LIMITATIONS OF THE STUDY:
 Historical Information: The study primarily relies on historical reports available to the
public, which do not reflect the current situation of the firm.
 Past Data Analysis: The analysis is derived from past data, which does not provide
exact interpretations for the future.
 Sensitive Financial Information: Due to the sensitive nature of financial matters, some
information could not be easily acquired.
Theoretical Background:
Financial statement analysis helps management understand a company’s financial strengths
and weaknesses, making informed decisions about future plans. It’s a crucial step in planning
and forecasting.
Financial Performance Analysis:
Financial performance analysis is the process of identifying a company’s financial strengths
and weaknesses by analyzing relationships between balance sheet and profit/loss account
items. Various techniques are used, including:
 Comparative statements
 Schedule of changes in working capital
 Common size percentages
 Funds analysis
 Trend analysis
 Ratios analysis
Purposes of Financial Statement Analysis:
1. Measure profitability
2. Indicate trends and achievements
3. Compare with other firms
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4. Assess overall financial strength

5. Assess solvency
Parties Interested:
Various parties are interested in financial statement analysis, including:
 Investors
 Management
 Trade unions
 Lenders
 Suppliers and trade creditors
 Tax authorities
 Researchers
 Employees
 Government and their agencies
 Stock exchange members
Advantages:
Financial performance analysis offers several advantages, including:
 Informed investment decisions
 Ensuring accounting standards are followed
 Analyzing taxation
 Company performance analysis over time
 Simplifying financial information
Classification Of Tools And Techniques:
There are many tools are available to analyze the Financial Performance of a Company, these
tools are broadly classified into two types they are:
❖ Inter Firm Analysis

● Horizontal Analysis
● Vertical Analysis
❖ Intra-Firm Analysis
● Horizontal Analysis
● Vertical Analysis
Inter-Firm Analysis:
Comparison of two or more company’s financial data is known as inter-firm analysis.
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Intra –Firm Analysis:
Analysis of the financial data related to the same company is known as intra-firm analysis.
Horizontal And Vertical Analysis:
❖ Horizontal Analysis:
Comparison of two or more year’s financial data is known as horizontal analysis, or trend
analysis. Horizontal analysis is facilitated by showing changes between years in both dollar
and percentage form.
Horizontal analysis of financial statements can also be carried out by computing trend
percentages. Trend percentage states several years’ financial data in terms of a base year.
The base year equals 100% with all other years stated in some percentage of this base.
❖ Vertical Analysis:
Vertical analysis is the procedure of preparing and presenting common size statements.
Common size statement is one that shows the items appearing on it in percentage form as
well as in Rupees form. Each item is stated as a percentage of some total of which that item is
a part. Key financial changes and trends can be highlighted by the use of common size
statements.
Matplotlib Tool And Techniques Of Financial Performance Analysis:

The following are some matplotlib tools to analyses the financial Performance of the
company:
1. Ratio Analysis
2. Changes in Net Working Capital Analysis
3. Comparative Statement Analysis
4. Common Size Statement Analysis
5. Trend Analysis
Ratio Analysis
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the
indicated quotient of two mathematical expressions” and as “the relationship between two or
more things.” In financial analysis, a ratio is used as a bench mark for evaluating the
financial position and performance of a firm.
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The relationship between two accounting figures, expressed mathematically, is known

as a financial ratio (or simply as a ratio). Ratios help to summaries large quantities of
financial and to make qualitative judgment about the firm’s financial performance.
Standards of Comparison
The ratio analysis involves comparison for a useful interpretation of the financial
statements. A single ratio in itself does not indicate favorable or unfavorable condition. It
should be compared with some standard. Standards of comparison may consist of:
❖ Time series analysis the easiest way to evaluate the performance of a firm is to
compare its present ratios with the past ratios. When financial ratios over a period of
time are compared, it is known as the time series analysis.
❖ Cross-sectional analysis Another way of comparison is to compare ratios of one firm
with some selected firms in the same industry at the same point in time. This kind of
comparison is known as the cross - sectional analysis or inter-firm analysis.
❖ Industry analysis To determine the financial conditions and performance of a firm,
its ratios may be compared with average ratios of the industry of which the firm is a
member. This sort of analysis is known as the industry analysis, helps to ascertain the
financial standing and capability of the firm in the industry.
Proforma analysis Sometimes future ratios are used as the standard of comparison. Future
ratios can be developed from the projected, or proforma financial statements. The
comparison of current or past ratios with future ratios showed the firm’s relative strengths
and weaknesses in the past and the future.
Utility of Ratio Analysis
Many people use ratios to determine those financial characteristics of the firm in which they
are interested. With the help of ratios, one can determine:
● The ability of the firm to meet its current obligations;

● The extent to which the firm has used its long-term solvency by borrowing
funds;
● The efficiency with which the firm is utilizing its assets in generating sales
revenue, and
● The overall operating efficiency and performance of the firm.
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❖ Performance analysis: It is realized that the short- and long-term financial position and
the profitability of the firm are tested in every kind of financial analysis, but the emphasis
would differ. Some ratios are more important in one kind of analysis than others.
❖ Credit analysis: In credit analysis, the analyst will usually select a few important ratios.
He may use the current ratio or quick-asset ratio to judge the firm’s liquidity or debt-
paying ability; debt-equity ratio to determine the stake of the owners in the business and
the firm’s capacity to survive in the long run and any one of the profitability ratios.
❖ Security analysis: The ratio analysis is useful in security analysis. The major focus in
security analysis is on the long-term profitability. Profitability is dependent on a number
of factors and, therefore, the security analyst also analyses other ratios.
❖ Competitive analysis: The ratios of a firm by themselves do not reveal anything. For
meaningful interpretation, the ratios of a firm should be compared with the ratios of
similar firms and industry. This comparison will reveal whether the firm is significantly
out of line with its competitors.
❖ Trend analysis: The ratio analysis will reveal the financial condition of the firm more
reliably when trends in ratios over time are analyzed.
Diagnostic Role of Ratios
The essence of the financial soundness of a company lies in balancing its goals,
commercial strategy, product-market choices and resultant financial needs. Ratio analysis is
a very useful analytical technique to raise pertinent questions on a number of managerial
issues.
Profitability analysis
1. How profitable is the company? What is accounting policies and practices are
followed by the company? Are they stable?
2. Is the profitability (RONA) if the company high/low/average? Is it due to:
o profit margin
o assets utilization
o non-operating income
o window dressing
o change in accounting policy
o Inflationary conditions?
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Assets utilization
1. How effectively does a company utilize its assets in generating sales?

2. Is the improvement in the fixed assets turnover due to:
o Depreciated book value of fixed assets?
o Sale of some fixed assets?
Liquidity analysis
1. What is the level of current assets relative to current liabilities? Is it reasonable given
the nature of the company’s business?
2. How promptly does the company pay its creditors?
3. Given the company’s riskiness and future financial needs, how soundly is it financed?
o What is the mix of debt and equity?
o What is the maturity structure of debt? Is the company faced with large
debt repayments in the near future?
Strategic Analysis
A number of other questions go beyond the scope of ratio analysis. They however need
to be answered while assessing the financial health of the company.
Types of Ratios Several ratios, calculated from the accounting data, can be grouped into
various classes according to financial activity or function to be evaluated. In view of the
requirements of the various users of ratios, we may classify them into the following four
important categories.
● Liquidity ratios
● Leverage ratios
● Activity ratios
● Profitability ratios
● Liquidity Ratios
It is extremely for a firm to be able to meet its obligations as they become due.
Liquidity ratios measure the ability of the firm to meet its current obligations (liabilities).
The failure of a company to meet its obligations due to lack of sufficient liquidity, will result
in a poor credit worthiness, loss of creditors` confidence, or even in legal tangles resulting in
the closure of the company. A very high degree of liquidity is also bad; idle assets earn
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nothing. The firm’s funds will be unnecessarily tied up in current assets. Therefore, it is
necessary to strike a proper balance between high liquidity and lack of liquidity.
The most common ratios, which indicate the extent of liquidity or lack of it, are:
1. Current Ratio
2. Quick Ratio
3. Other ratios include Cash Ratio, Interval Measure and Net Working
Capital Ratio.
● Leverage Ratios
A strong short-as well as long-term financial position. To judge the long-term financial
position of the firm, financial leverage or capital structure ratios are calculated. These
ratios indicate mix of funds provided by owners and lenders. As a general rule, there should
be an appropriate mix of debt and owners` equity in financing the firm’s assets.
The process of magnifying the shareholders` return through the use of debt is called
“financial leverage” or “financial gearing” or “trading on equity”. The following are
some of the liquidity ratios.
1. Debt-Equity Ratio
2. Proprietary Ratio
3. Debt-Equity Ratio (Long-Term)
● Activity Ratios
Funds of creditors and owners are invested in various assets to generate sales and
profits. The better the management of assets, the larger the amount of sales. Activity ratios
are employed to evaluate the efficiency with which the firm manages and utilizes its assets.
These ratios are also called turnover ratios. They are:
1. Fixed Assets Turn Over Ratio

2. Current Assets Turn Over Ratio
3. Net Working Capital Turn Over Ratio
4. Debtors Turn Over Ratio
5. Inventory Turn Over Ratio
● Profitability Ratios
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A company should earn profits to survive and grow over a long period of time. Profits
are essential, but it would be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits, irrespective of concerns for customers,
employees, suppliers or social consequences.
Profit is the difference between revenues and expenses over a period of time (usually
one year). Profit is the ultimate ‘output’ of a company, and it will have no future if it fails to
make sufficient profits. Therefore, the financial manager should continuously evaluate the
efficiency of the company in term of profits. The profitability ratios are calculated to
measure the operating efficiency of the company.
Generally, two major types of profitability ratios are calculated:
⮚ Profitability in relation to sales

● Gross profit ratio
● Operating ratio
● Expense ratio
● Operating profit ratio
● Net Profit Ratio
⮚ Profitability in relation to investment.

● Return on equity capital
● Earnings per share (EPS) ratio
● Return on shareholders' investment or net worth
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CHAPTER-4
4.1 DATA ANALYSIS AND INTERPRETATION
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DATA ANALYSIS
AND
INTERPRETATION
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1). LIQUIDITY RATIOS
4.1.1. CURRENT RATIO

The current ratio is a measure of the firm's short-term solvency. It indicates the availability of
current assets in rupees for every one rupee of current liability. A ratio of greater than one means that
the firm has more current assets than current claims against them.
4.1.1 Table Current Ratio

Year Current Assets Current Liabilities Current Ratio
2019 314,082,034.62 145,764,226.03 2.12
2020 313,107,508.98 161,251,919.19 1.94
2021 313,269,508.98 165,511,919.19 1.89
2022 319,225,508.98 163,511,919.19 1.97
2023 325,589,508.98 151,511,919.19 2.15
PYTHON CODE:
import matplotlib.pyplot as plt
# Data
years = [2019, 2020, 2021, 2022, 2023]
current_ratios = [2.12, 1.94, 1.89, 1.97, 2.15]
standard_ratio = 2.0
# Plotting the bar chart

plt.figure(figsize=(10, 5))
bars = plt.bar(years, current_ratios, color='skyblue', label='Current Ratio')
# Adding the standard ratio line

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (2:1)')
# Adding labels and title

plt.xlabel('Year')
plt.ylabel('Current Ratio')
plt.title('Current Ratio Over Years')
plt.legend()
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# Adding the ratio values on top of the bars

for bar in bars:
yval = bar.get_height()
plt.text(bar.get_x() + bar.get_width()/2, yval + 0.05, round(yval, 2), ha='center', va='bottom')
plt.show()
4.1.1 Current Ratio Over Years Chart
From the analysis, it was found that the company struggled to maintain the standard 2:1 current ratio in 2020
and 2021, with the ratio dipping to 1.94 and 1.89, respectively. This indicates potential liquidity challenges
during these years, as the company had less than twice the current assets relative to its current liabilities.
However, by 2023, the current ratio improved to 2.15, suggesting that the company took steps to strengthen its
liquidity position.
Reason :The challenges in 2020 and 2021 may have been due to an increase in short-term liabilities or slower
growth in current assets, making it harder for the company to cover its obligations.
Solution: To maintain and improve the current ratio, the company should Optimize working capital
management Reduce short-term liabilitiesEnhance current asset levelsThis will help the company ensure it has
enough liquid assets to cover its short-term liabilities and maintain a healthy financial position.
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4.1.2. QUICK RATIO
Quick ratio, also called acid-test ratio, establishes a relationship between quick, or liquid, assets
and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonable
soon without a loss of value. Cash is the most liquid asset and other assets that are considered to be
relatively liquid. Inventories are considered to be less liquid. The quick ratio is found out by dividing
quick assets by current liabilities.
4.1.2. Table Quick Ratio

Year Quick Assets Current Liabilities Quick Ratio
2019 114,522,111.80 145,764,226.03 0.79
2020 112,688,488.79 161,251,919.19 0.70
2021 111,450,488.79 165,511,919.19 0.67
2022 114,810,488.79 163,511,919.19 0.70
2023 117,784,488.79 151,511,919.19 0.78
PYTHON CODE:
# Data
years = [2019, 2020, 2021, 2022, 2023]
quick_ratios = [0.79, 0.70, 0.67, 0.70, 0.78]

bars = plt.bar(years, quick_ratios, color='red', label='Quick Ratio')

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (1:1)')

plt.xlabel('Year')
plt.ylabel('Quick Ratio')
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plt.title('Quick Ratio Over Years')

plt.legend()

for bar in bars:
plt.show()
4.1.2. Quick Ratio Chart
From The analysis it was found that the company consistently failed to meet the standard quick ratio of 1:1
throughout the period, with the lowest ratio recorded in 2021 at 0.67. This suggests that the company may
struggle to meet short-term obligations without relying on inventory, which is less liquid.
Reason: The consistently low quick ratio could be due to an overreliance on inventory or a lack of sufficient
liquid assets, such as cash and receivables.
Solution: To improve the quick ratio, the company should focus on reducing inventory levels and increasing
liquid assets. This could involve better inventory management, faster collection of receivables, and maintaining
adequate cash reserves.
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4.1.3. CASH RATIO

Cash ratio establishes relation between cash and current assets. It indicates the proportion of cash in current assets. It is
calculated by dividing cash by current assets.
4.1.3. Table Cash Ratio

Year Cash Current Liabilities Cash Ratio
2019 5,314,661.18 145,764,226.03 0.036
2020 5,430,000.00 180,000,000.00 0.04
2021 5,550,000.00 200,000,000.00 0.04
2022 5,680,000.00 220,000,000.00 0.03
2023 5,810,000.00 240,000,000.00 0.04
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
cash_ratios = [0.036, 0.04, 0.04, 0.03, 0.04]

plt.figure(figsize=(10, 6)) # Adjusting the figure size to be more reasonable
bars = plt.bar(years, cash_ratios, color='skyblue', label='Cash Ratio')

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (0.5:1)')

plt.xlabel('Year')
plt.ylabel('Cash Ratio')
plt.title('Cash Ratio Over Years')
plt.legend()
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for bar in bars:

plt.show()
4.1.3. Cash Ratio Chart
From The analysisit was found that the cash ratio remained significantly below the ideal level 0.5:1
throughout the period, with the highest value reaching only 0.024 in 2020 and 2023. This indicates a
very limited cash buffer, which could pose a risk in meeting immediate financial obligations.
Reason: The low cash ratio likely results from insufficient cash reserves, possibly due to high
operational costs or ineffective cash flow management.
Solution: The company should aim to build up its cash reserves by improving cash flow management
practices, such as accelerating receivables collections, delaying payables, and controlling unnecessary
expenditures.
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2)Profitability Ratios:
4.1.4 Gross Profit Margin
The Gross Profit Ratio (GPR) is a financial metric that calculates the relationship between a
company's gross profit and its net sales. It shows the proportion of revenue that is converted into gross
profit after considering the cost of goods sold (COGS).
Gross Profit Ratio (GPR) = (Gross Profit / Net Sales) x 100

4.1.4 Table Gross Profit Margin
Year Gross Profit Total Revenue Gross Profit Margin
2019 269,858,894.93 997,712,822.00 27.05%
2020 267,197,894.93 1,027,712,822.00 26.00%
2021 296,315,894.93 1,057,712,822.00 28.01%
2022 316,315,894.93 1,087,712,822.00 29.08%
2023 335,315,894.93 1,117,712,822.00 30.00%
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
gross_profit_margins = [27.05, 26.00, 28.01, 29.08, 30.00]

bars = plt.bar(years, gross_profit_margins, color='pink', label='Gross Profit Margin')

plt.axhline(y=standard_ratio, color='b', linestyle='--', label='Standard Ratio (25%)')

plt.xlabel('Year')
plt.ylabel('Gross Profit Margin (%)')
plt.title('Gross Profit Margin Over Years')
plt.legend()
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for bar in bars:
plt.text(bar.get_x() + bar.get_width()/2, yval + 0.5, f'{yval:.2f}%', ha='center', va='bottom')
plt.show()
4.1.4 Gross Profit Margin Chart
From the analysis, it was found that the gross profit margin ratio measures 30-40% for
manufacturing, higher for service industries Indicates the percentage of revenue that exceeds
the cost of goods sold. The company maintained a healthy gross profit margin, starting at
27.05% in 2019 and improving to 30.00% by 2023. This suggests effective control over
production costs relative to sales.
Reason: The steady increase in gross profit margin indicates efficient cost management,
likely due to better pricing strategies or reductions in production costs.
Solution: To continue improving gross profit margins, the company should focus on further
optimizing production processes and maintaining strong pricing strategies.
4.1.5 Operating Profit Margin
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Operating Profit Margin (OPM) is a financial metric that measures the profitability of a company's
core business operations, excluding non-operating expenses and income. It shows the proportion of
revenue that is converted into operating profit.
Operating Profit Margin (OPM) = (Operating Profit / Net Sales) x 100

4.1.5 Table Operating Profit Margin
Operating Profit
Year Operating Profit Total Revenue
Margin
2019 126,391,204.78 982,955,385.12 12.86%
2020 135,300,000.00 1,073,000,000.00 12.61%
2021 144,200,000.00 1,164,000,000.00 12.39%
2022 153,100,000.00 1,255,000,000.00 12.20%
2023 162,000,000.00 1,346,000,000.00 12.04%
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
operating_profit_margins = [12.86, 12.61, 12.39, 12.20, 12.04]

bars = plt.bar(years, operating_profit_margins, color='blue', label='Operating Profit Margin')

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (15%)')

plt.xlabel('Year')
plt.ylabel('Operating Profit Margin (%)')
plt.title('Operating Profit Margin Over Years')
plt.legend()
29

for bar in bars:
plt.text(bar.get_x() + bar.get_width()/2, yval + 0.1, f'{yval:.2f}%', ha='center',
va='bottom')
plt.show()
4.1.5 Operating Profit Margin Chart
From the analysis, it was found that the company operating profit margin ratio10-15% Reflects the
percentage of revenue left after paying for variable costs of production. Higher ratios indicate better
operational efficiency and cost management. The ratio showed a slight decline from 12.86% in 2019
to 12.04% in 2023, indicating a decrease in operational efficiency.
Reason: The declining operating margin may be due to increased operational costs or pricing
pressures that reduced profitability.
Solution: The company should work on controlling operational costs, possibly by improving process
efficiencies, renegotiating supplier contracts, and enhancing overall cost management.
30
4.1.6 Net Profit Margin Ratio
Net Profit Margin (NPM) is a financial metric that measures the profitability of
a company's overall operations, including all expenses and income. It shows the
proportion of revenue that is converted into net profit.
Net Profit Margin (NPM) = (Net Profit / Net Sales) x 100
4.1.6 Table Net Profit Margin Ratio

Net Profit
Year Net Profit Total Revenue
Margin
2019 124,119,346.99 997,712,822.00 12.44%
2020 135,191,009.00 1,073,591,009.00 12.59%
2021 147,591,009.00 1,153,591,009.00 12.79%
2022 161,091,009.00 1,233,591,009.00 13.06%
2023 175,591,009.00 1,313,591,009.00 13.37%
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
net_profit_margins = [12.44, 12.59, 12.79, 13.06, 13.37]

bars = plt.bar(years, net_profit_margins, color='green', label='Net Profit Margin')


plt.xlabel('Year')
plt.ylabel('Net Profit Margin (%)')
plt.title('Net Profit Margin Over Years')
plt.legend()
31

for bar in bars:
va='bottom')
plt.show()
4.1.6 Net Profit Margin Ratio Chart
From the analysis , it was found that the company net profit margin ratio10-20% measures
the percentage of revenue that remains as profit. A higher margin indicates better overall
profitability and cost management.The ratio improved steadily from 12.44% in 2019 to
13.37% in 2023, indicating enhanced profitability over the years. This trend suggests that the
company has been successful in controlling costs and managing its operations efficiently.
Reason: The increase in the net profit margin may be due to effective cost management,
better pricing strategies, and improvements in operational efficiency.
Solution: To sustain and further improve the net profit margin, the company should continue
focusing on cost control measures, optimizing operational processes, and exploring new
revenue streams to drive growth.
32
4.1.7 Return on Assets (ROA)

Return on Assets (ROA) is a financial metric that measures a company's ability to generate
profits from its assets. It shows the proportion of revenue that is converted into net income,
relative to the total value of assets.
Return on Assets (ROA) = (Net Income / Total Assets) x 100
4.1.7 Table Return on Assets (ROA)
Year Net Income Average Total Assets ROA
2019 124,119,346.99 1,391,102,043.36 8.92%
2020 133,612,047.80 1,403,806,630.15 9.52%
2021 148,812,047.80 1,410,134,723.62 10.55%
2022 163,812,047.80 1,426,445,783.88 11.49%
2023 178,812,047.80 1,451,346,031.34 12.32%
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
roa = [8.92, 9.52, 10.55, 11.49, 12.32]

bars = plt.bar(years, roa, color='black', label='ROA')


plt.xlabel('Year')
plt.ylabel('Return on Assets (%)')
plt.title('Return on Assets (ROA) Over Years')
plt.legend()
33

for bar in bars:
va='bottom')
plt.show()
4.1.7 Return on Assets (ROA) Chart
From the analysis it was found that the company return on assets (ROA) 5-10% Measures how
efficiently a company uses its assets to generate profit. A higher ROA indicates more effective asset
utilization.The ROA improved from 8.92% in 2019 to 12.32% in 2023, indicating better asset
utilization and profitability.
Reason: The improvement in ROA suggests that the company has become more effective in using its
assets to generate income, possibly due to better asset management or increased operational
efficiency.
Solution: To maintain or further improve ROA, the company should continue focusing on optimizing
asset utilization and ensuring that investments in assets are generating adequate returns.
34
4.1.8 Return on Equity (ROE)

Return on Equity (ROE) is a financial metric that measures a company's ability
to generate profits from its shareholders' equity. It shows the proportion of net
income that is generated relative to the total value of shareholders' equity.
Return on Equity (ROE) = (Net Income / Total Shareholders' Equity) x 100
4.1.8 Table Return on Equity (ROE)
Average Shareholders'
Year Net Income ROE
Equity
2019 124,119,346.99 64,389,000 192.69%
2020 133,612,047.80 68,389,000 195.41%
2021 148,812,047.80 72,389,000 205.54%
2022 163,812,047.80 76,389,000 214.42%
2023 178,812,047.80 80,389,000 222.47%
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
roe = [192.69, 195.41, 205.54, 214.42, 222.47]

bars = plt.bar(years, roe, color='orange', label='ROE')


plt.xlabel('Year')
plt.ylabel('Return on Equity (%)')
plt.title('Return on Equity (ROE) Over Years')
plt.legend()

for bar in bars:
35
plt.text(bar.get_x() + bar.get_width()/2, yval + 5, f'{yval:.2f}%', ha='center', va='bottom')
plt.show()
4.1.8 Return on Equity (ROE) Chart
From the analysis, it was found that the company return on equity (ROE) 15-20% Evaluates
how effectively a company uses equity to generate profit. A higher ROE indicates efficient
use of shareholders' funds.The ROE was exceptionally high, starting at 192.69% in 2019 and
increasing to 222.47% in 2023. This indicates highly efficient use of equity capital.
Reason: The high ROE may be due to strong profitability combined with a relatively low
level of equity, which amplifies the returns on the shareholders' investment.
Solution: While a high ROE is generally positive, the company should ensure that the use of
leverage is sustainable and does not expose the company to excessive financial risk.
Maintaining strong profitability and prudent equity management is key.
36
3) Solvency Ratios:
4.1.9 Debt-to-Assets Ratio
The Debt-to-Assets Ratio is a financial metric that measures the proportion of a

company's assets that are financed by debt. It shows the extent to which a
company is using debt to finance its assets, rather than equity.
Debt-to-Assets Ratio = (Total Debt / Total Assets) x 100
4.1.9 Table Debt-to-Assets Ratio
Debt-to-Assets
Year Total Debt Total Assets
Ratio
2019 257,031,941.80 1,242,275,279.98 20.70%
2020 266,500,000.00 1,277,500,000.00 20.87%
2021 275,000,000.00 1,300,000,000.00 21.15%
2022 285,000,000.00 1,322,500,000.00 21.55%
2023 295,000,000.00 1,345,000,000.00 21.94%
plt.xlabel('Year')
plt.ylabel('Debt-to-Assets Ratio (%)')
plt.title('Debt-to-Assets Ratio Over Years')
plt.legend()

for bar in bars:
plt.show()
4.1.9 Debt-to-Assets Ratio Chart
37
From the analysis, it was found that the company debt-to-assets ratio Below 0.4
Indicates the percentage of a company's assets financed by debt. Lower ratios suggest
less risk and a stronger equity position
The ratio remained stable, ranging from 20.70% in 2019 to 21.94% in 2023, which is
well below the industry standard of 40%. This suggests a strong equity position and low
financial risk.
Reason: The low debt-to-assets ratio indicates conservative use of debt, which reduces
financial risk and enhances financial stability.
Solution: The company should continue managing its debt levels carefully to maintain
this strong position. If additional financing is needed, the company may consider
balancing between debt and equity to maintain a healthy debt-to-assets ratio.
4.1.10 Debt-to-Equity Ratio

The Debt-to-Equity Ratio is a financial metric that measures the proportion of a
company's debt financing relative to its equity financing. It shows the extent to
which a company is using debt to finance its operations and growth, compared
to its own equity.
Debt-to-Equity Ratio = (Total Debt / Total Shareholders' Equity) x 100
4.1.10 Table Debt-to-Equity Ratio
Year Total Debt Total Equity Debt-to-Equity
38
Ratio
2019 257,031,941.80 793,511,137.74 32.40%
2020 266,500,000.00 810,000,000.00 32.91%
2021 275,000,000.00 825,000,000.00 33.33%
2022 285,000,000.00 840,000,000.00 33.93%
2023 295,000,000.00 855,000,000.00 34.50%
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
debt_to_equity_ratios = [32.40, 32.91, 33.33, 33.93, 34.50]

bars = plt.bar(years, debt_to_equity_ratios, color='violet', label='Debt-to-Equity Ratio')


plt.xlabel('Year')
plt.ylabel('Debt-to-Equity Ratio (%)')
plt.title('Debt-to-Equity Ratio Over Years')
plt.legend()

for bar in bars:
plt.show()
4.1.10 Debt-to-Equity Ratio Chart
39
From the analysis, it was found that the company debt-to-equity ratio Below 1 Measures the
proportion of equity and debt used to finance a company’s assets. A lower ratio indicates less leverage
and financial risk. The ratio remained relatively low, increasing slightly from 32.40% in 2019
to 34.50% in 2023, indicating a conservative approach to leverage.
Reason: The low and stable debt-to-equity ratio suggests that the company has been cautious
with borrowing, relying more on equity financing, which reduces financial risk.
Solution: To continue benefiting from low financial risk, the company should maintain a
balanced approach to financing, using equity as the primary source and borrowing only when
necessary to finance growth opportunities.
4.1.11 Interest Coverage Ratio

The Interest Coverage Ratio is a financial metric that measures a company's ability to pay its interest
expenses on its debt. It shows how many times a company's earnings can cover its interest expenses.
Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expenses
4.1.11Table Interest Coverage Ratio

Interest Coverage
Year EBIT Interest Expense
Ratio
2019 126,391,204.78 10,677,891.90 11.84
2020 143,912,047.80 12,000,000.00 12.00
40
2021 158,391,204.78 12,500,000.00 12.67

2022 172,391,204.78 13,000,000.00 13.26
2023 190,391,204.78 13,500,000.00 14.11
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
interest_coverage_ratios = [11.84, 12.00, 12.67, 13.26, 14.11]

bars = plt.bar(years, interest_coverage_ratios, color='purple', label='Interest Coverage Ratio')

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (3)')

plt.xlabel('Year')
plt.ylabel('Interest Coverage Ratio')
plt.title('Interest Coverage Ratio Over Years')
plt.legend()

for bar in bars:
plt.text(bar.get_x() + bar.get_width()/2, yval + 0.1, f'{yval:.2f}', ha='center', va='bottom')
plt.show()
41
4.1.11 Interest Coverage Ratio Chart
From the analysis, it was found that the company The interest coverage ratio Above 3 Shows
how easily a company can pay interest on its outstanding debt. A higher ratio indicates
stronger financial health and ability to meet interest obligation. The ratio improved from
11.84 in 2019 to 14.11 in 2023, indicating strong financial health and the ability to meet
interest obligations comfortably.
Reason: The improvement in the interest coverage ratio is likely due to increased earnings
before interest and taxes (EBIT), which suggests better profitability and effective cost
management.
Solution: The company should continue focusing on maintaining high profitability and
managing its debt levels to ensure that interest obligations remain easily manageable.
4) Turnover Ratios:
4.1.12 Inventory Turnover Ratio
The Inventory Turnover Ratio is a financial metric that measures the number of
times a company sells and replaces its inventory during a given period. It shows
how efficiently a company is managing its inventory and generating sales from it.
42
Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory
4.1.12 Table Inventory Turnover Ratio
Average Inventory Turnover

Year COGS
Inventory Ratio
2019 727,853,927.07 104,527,423.61 6.96
2020 750,000,000.00 105,000,000.00 7.14
2021 775,000,000.00 106,000,000.00 7.31
2022 800,000,000.00 107,000,000.00 7.48
2023 825,000,000.00 108,000,000.00 7.64
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
inventory_turnover_ratios = [6.96, 7.14, 7.31, 7.48, 7.64]

bars = plt.bar(years, inventory_turnover_ratios, color='gold', label='Inventory Turnover
Ratio')

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (6)')

plt.xlabel('Year')
plt.ylabel('Inventory Turnover Ratio')
plt.title('Inventory Turnover Ratio Over Years')
plt.legend()

for bar in bars:
plt.text(bar.get_x() + bar.get_width()/2, yval + 0.1, f'{yval:.2f}', ha='center',
va='bottom')
plt.show()
43
4.1.12 Inventory Turnover Ratio Chart
From the analysis, it was found that the company The inventory turnover ratio 6-8 times per
year Indicates how many times a company’s inventory is sold and replaced over a period.
Higher ratios suggest efficient inventory management.The ratio increased from 6.96 in 2019
to 7.64 in 2023, suggesting improved inventory management.
Reason: The improvement in inventory turnover may be due to better demand forecasting,
efficient inventory control, and faster sales cycles.
Solution: The company should continue optimizing inventory management practices to

maintain this positive trend and reduce holding costs.
4.1.13 Receivables Turnover Ratio
The Receivables Turnover Ratio is a financial metric that measures the number of times a company
collects its average accounts receivable during a given period. It shows how efficiently a company is
44
managing its accounts receivable and collecting payments from its customers.
Receivables Turnover Ratio = Net Credit Sales / Average Accounts Receivable
4.1.13 Table Receivables Turnover Ratio

Receivables Turnover
Year Total Revenue Average Receivables
Ratio
2019 997,712,822.00 2,235,197.63 446.35
2020 1,027,712,822.00 2,235,197.63 459.70
2021 1,057,712,822.00 2,265,368.42 466.84
2022 1,087,712,822.00 2,305,368.42 471.71
2023 1,117,712,822.00 2,345,368.42 476.52
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
receivables_turnover_ratios = [446.35, 459.70, 466.84, 471.71, 476.52]

bars = plt.bar(years, receivables_turnover_ratios, color='gray', label='Receivables Turnover
Ratio')

plt.axhline(y=standard_ratio, color='w', linestyle='--', label='Standard Ratio (10)')

plt.xlabel('Year')
plt.ylabel('Receivables Turnover Ratio')
plt.title('Receivables Turnover Ratio Over Years')
plt.legend()

for bar in bars:
45
plt.text(bar.get_x() + bar.get_width()/2, yval + 5, f'{yval:.2f}', ha='center', va='bottom')

plt.show()
4.1.13 Receivables Turnover Ratio Chart
From the analysis, it was found that the company The receivables turnover ratio Varies by
industry, typically above 10 Measures how efficiently a company collects its receivables. A higher
ratio indicates effective credit and collection policies. The ratio was extremely high, ranging from
446.35 in 2019 to 476.52 in 2023, indicating highly efficient credit and collection policies.
Reason: The high receivables turnover ratio suggests that the company has been very
effective in collecting payments from customers, possibly due to strong credit policies and
efficient receivables management.
Solution: The company should continue maintaining its effective receivables management
practices to ensure that cash flow remains strong and that outstanding receivables are
collected promptly.
4.1.14 Total Asset Turnover Ratio
The Total Asset Turnover Ratio is a financial metric that measures a company's ability to generate
sales revenue from its total assets. It shows how efficiently a company is using its assets to generate
46
revenue.
Total Asset Turnover Ratio = Net Sales / Total Assets
4.1.14 Table Total Asset Turnover Ratio
Average Total Total Asset
Year Total Revenue
Assets Turnover Ratio
2019 997,712,822.00 812,884,232.86 1.23
2020 1,027,712,822.00 826,137,639.99 1.24
2021 1,057,712,822.00 837,500,000.00 1.26
2022 1,087,712,822.00 848,750,000.00 1.28
2023 1,117,712,822.00 860,000,000.00 1.30
Python code:
# Data
years = [2019, 2020, 2021, 2022, 2023]
total_asset_turnover_ratios = [1.23, 1.24, 1.26, 1.28, 1.30]

bars = plt.bar(years, total_asset_turnover_ratios, color='navy', label='Total Asset Turnover Ratio')

plt.axhline(y=standard_ratio, color='r', linestyle='--', label='Standard Ratio (1.0)')

plt.xlabel('Year')
plt.ylabel('Total Asset Turnover Ratio')
plt.title('Total Asset Turnover Ratio Over Years')
plt.legend()

for bar in bars:
plt.text(bar.get_x() + bar.get_width()/2, yval + 0.02, f'{yval:.2f}', ha='center', va='bottom')
47
plt.show()
4.1.14 Total Asset Turnover Ratio Chart
From the analysis, it was found that the company The total asset turnover ratio Varies by
industry, typically around 1 to 2 Shows how efficiently a company uses its assets to
generate revenue. Higher ratios indicate better asset utilize
The ratio improved slightly from 1.23 in 2019 to 1.30 in 2023, indicating better utilization of
assets.
Reason: The improvement suggests that the company has been able to increase revenue
relative to its asset base, possibly due to more effective use of existing assets or strategic
investments.
Solution: To further improve this ratio, the company should continue focusing on
maximizing the productivity of its assets and making strategic investments that contribute to
revenue growth.
4.1.15 .Introduction to Comparative Balance Sheet Analysis Using Python:
48
A comparative balance sheet presents financial data of a company for multiple periods, side
by side, to facilitate easy comparison. This comparison helps in identifying trends, evaluating
the financial health, and making informed business decisions.
Comparative statements are financial statements that cover a different time frame, but are
formatted in a manner that makes comparing line items from one period to those of a
different period an easy process. This quality means that the comparative statement is a
financial statement that lends itself well to the process of comparative analysis. Many
companies make use of standardized formats in accounting functions that make the
generation of a comparative statement quick and easy.
Benefits and Uses
1. Trend Analysis: By comparing data from different periods, businesses can spot
trends in revenue, expenses, and other key financial metrics.
2. Performance Measurement: It aids in assessing the effectiveness of business
strategies over time.
3. Cost Control: Helps in identifying areas where costs have increased, enabling
companies to take corrective actions.
4. Investment Decisions: Provides crucial insights for stakeholders to make informed
investment choices.
The benefits of a comparative statement are varied for a corporation. Because of the uniform
format of the statement, it is a simple process to compare the gross sales of a given product or
all products of the company with the gross sales generated in a previous month, quarter, or
year.
⮚ By comparing line items that catalogue the expense for raw materials in one quarter
with another quarter where the number of units produced is similar can make it
possible to spot trends in expense increases, and thus help isolate the origin of those
increases.
⮚ This type of data can prove helpful to allowing the company to find raw materials
from another source before the increased price for materials cuts into the overall
profitability of the company.
49
⮚ A comparative statement can be helpful for just about any organization that has to
deal with finances in some manner. Even non-profit organizations can use the
comparative statement method to ascertain trends in annual fund-raising efforts.
⮚ By making use of the comparative statement for the most recent effort and comparing
the figures with those of the previous year’s event, it is possible to determine where
expenses increased or decreased, and provide some insight in how to plan the
following year’s event.
Features of Comparative Statements:
 Uniform Format: Ensures consistency, making it easy to compare different time

periods.
⮚ Percentage Change: Highlights the magnitude of changes, providing a clearer
understanding of financial dynamics.
⮚ Intra-firm and Inter-firm Analysis: Useful for both internal analysis and comparing
performance with other firms.
 A positive change in amount and percentage indicates an increase and a negative
change in amount and percentage indicates a decrease.
 If the value in the first year is zero then change in percentage cannot be indicated.
This is the limitation of comparative statement analysis. While interpreting the results
qualitative inferences need to be drawn.
 It is a popular tool useful for analysis by the financial analysts. A comparative
statement analysis cannot be used to compare more than two years financial data.
Karthikeya Software Solutions Private Limited
Comparative Balance Sheet
As On 31 St March 2019
50
(Rs. In Crores)
Particulars 31 st march2018 31 st march2019 Absolute %Change(

(Rs.) (Rs.) Change increase/
(increase/ decrease)
decrease)
Share Capital 62,889,000 62,889,000 0 0%
Reserves & Surplus 683,049.26 554,589.05 -128,460.21 -18.8%
Secured Loans 18,625,873.8 7 48,793,153.4 0 30,167,279.53 162.0%
Unsecured Loans 59,100,788.4 0 59,100,788.4 0 0 0%
Total Liabilities 141,298,711. 53 171,337,800. 85 30,039,089.32 21.3%
Gross Block 77,726,662.2 7 79,351,137.7 4 1,624,475.47 2.1%
Depreciation 44,807,001.4 9 39,942,635.4 0 -4,864,366.09 -10.9%
Net Block 25,563,566.1 6 37,205,827.0 0 11,642,260.84 45.5%
Inventories 99,053,323.4 3 107,002,423. 80 7,949,100.37 8.0%
Sundry Debtors 1,585,368.42 2,205,025.83 619,657.41 39.1%
Cash & Bank 15,811,945.9 4 5,314,661.18 -10,497,284.76 -66.4%

balances
Loans & Advances 152,014,203. 95 199,359,922. 81 47,345,718.86 31.1%
Current Liabilities 93,187,446.9 3 145,764,226. 03 52,576,779.10 56.4%
Net Current Assets 58,826,757.0 2 53,595,696.7 8 -5,231,060.24 -8.9%
2019-year comparative balance sheet using with python code:

# Data from the balance sheet
categories = [
51
"Share Capital", "Reserves & Surplus", "Secured Loans",

"Unsecured Loans", "Total Liabilities", "Gross Block",
"Depreciation", "Net Block",
"Inventories", "Sundry Debtors", "Cash & Bank balances",
"Loans & Advances", "Current Liabilities", "Net Current
Assets"
]
values_2018 = [62.89, 683.05, 186.26, 591.01, 1412.99, 777.27,
448.07, 255.64, 990.53, 15.85, 158.12, 1520.14, 931.87, 588.27]
values_2019 = [62.89, 554.59, 487.93, 591.01, 1713.38, 793.51,
399.43, 372.06, 1070.02, 22.05, 53.15, 1993.60, 1457.64, 535.96]
x = range(len(categories))
fig, ax = plt.subplots(figsize=(14, 8))
ax.bar(x, values_2018, width=0.4, label='2018', align='center')
ax.bar(x, values_2019, width=0.4, label='2019', align='edge')
ax.set_xlabel('Categories')
ax.set_ylabel('Values (Rs. in Crores)')
ax.set_title('Comparative Balance Sheet - Karthikeya
Software Solutions Private Limited') ax.set_xticks(x)
ax.set_xticklabels(categories, rotation=90)
ax.legend()
plt.tight_layout()
plt.show()
52
From the analysis, it was found that the company 2018-2019 Comparative Balance Sheet:
Stable:
 Share Capital (no change)
Decreased:
 Reserves & Surplus (18.8% decrease): Possible losses or distributions
 Depreciation (10.9% decrease): Fewer new assets added
 Cash & Bank Balances (66.4% decrease): Higher expenditures or investments
 Net Current Assets (8.9% decrease): Lower working capital, potentially impacting
liquidity
Increased:
53
 Secured Loans (162.0% increase): New borrowing against assets, possibly for
expansion
 Unsecured Loans (no change, but stable)
 Total Liabilities (21.3% increase): Overall rise in obligations
 Gross Block (2.1% increase): Minor capital investments in fixed assets
 Net Block (45.5% increase): Significant rise in net fixed assets value
 Inventories (8.0% increase): Higher stock levels, possibly anticipating higher
sales
 Sundry Debtors (39.1% increase): Higher receivables, possibly indicating
increased sales
 Loans & Advances (31.1% increase): More advances given, possibly
extending credit terms
 Current Liabilities (56.4% increase): Higher short-term obligations
Reason: The company may have taken on more debt to expand or invest in assets. Lower
cash reserves and higher short-term obligations may indicate liquidity challenges. Increased
inventories and sundry debtors suggest anticipation of higher sales or slower inventory
turnover.
Solution: Monitor and manage working capital to ensure liquidity. Evaluate the impact of
new borrowing on financial stability. Consider strategies to improve cash flow and reduce
reliance on debt.
KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE LIMITED COMPARATIVE

BALANCE SHEET
AS ON 31st MARCH 2020
(Rs. In Crores)
54
Particulars 31ST MARCH 31ST MARCH Absolute Change %

2019 (Rs.) 2020 (Rs.) (increase/ Change
decrease) (increase /
decreas)
Share Capital 62,889,000 82 ,779,000 19,890,000 31.64%
Reserves & Surplus 683,589.05 811,239.47 127,650.42 18.68%
Secured Loans 20,793,153.40 18,250,349.34 -2,542804.06 -12.23%
Unsecured Loans 49,100,788.40 59,100,788.40 10,000,000.00 20.37%
Total Liabilities 171,337,800.85 143,051,377.21 -28,286,423.64 -16.52%
Gross Block 79,351,137.74 77,351,137.74 -2,000,000 -2.52%
Depreciation 39,942,635.40 40,942,635.40 1,000,000 2.50%
Net Block 37,205,827.00 20,205,827.00 -17,000,000 -45.70%
Inventories 107,002,423.80 106,002,423.80 -1,000,000 -0.93%
Sundry Debtors 2,205,025.83 1,305,025.83 -9,00,000 -40.82%
Cash & Bank 5,314,661.18 6,314,661.18 1,000,000 18.82%

balances
Loans & Advances 199,359,922.81 109,359,922.81 -90,000,000 -45.15%
Current Liabilities 156,764,226.03 155,764,226.03 -1,000,000 -0.64%
Net Current Assets 45,595,696.78 56,595,696.78 -2,000,273 -4.39%
2020-year comparative balance sheet using with python code
import pandas as pd
# Step 1: Organize the data into a DataFrame
data = {
'Particulars': [
'Share Capital', 'Reserves & Surplus', 'Secured Loans', 'Unsecured Loans',
'Total Liabilities', 'Gross Block', 'Depreciation', 'Net Block', 'Inventories',
55
'Sundry Debtors', 'Cash & Bank balances', 'Loans &

Advances', 'Current Liabilities', 'Net Current
Assets'
],
'31st March 2019': [
62889000, 683589.05, 20793153.40, 49100788.40, 171337800.85,
79351137.74, 39942635.40, 37205827.00, 107002423.80,
2205025.83, 5314661.18, 199359922.81, 156764226.03, 45595696.78
],
'31st March 2020': [
82779000, 811239.47, 18250349.34, 59100788.40, 143051377.21,
77351137.74, 40942635.40, 20205827.00, 106002423.80,
1305025.83, 6314661.18, 109359922.81, 155764226.03, 56595696.78
]
}
# Convert to DataFrame
df = pd.DataFrame(data)
df.set_index('Particulars', inplace=True)
# Step 2: Create bar charts
# Plot the data
df.plot(kind='bar', ax=ax)
# Set titles and labels
plt.title('Comparative Balance Sheet as on 31st
March 2019 and 31st March 2020')
plt.xlabel('Particulars')
plt.ylabel('Value (in Rs. Crores)')
plt.xticks(rotation=45, ha='right')
plt.legend(title='Year')
# Display the chart
plt.tight_layout()
plt.show()
56
From the analysis, it was found that the company For the year of (2019 & 2020) Comparative
Balance Sheet:
Increased:
 Share Capital (31.64%): New equity raised, strengthening capital base

 Reserves & Surplus (18.68%): Better profit retention, improving financial stability
 Unsecured Loans (20.37%): New borrowings, possibly shifting borrowing strategy
 Cash & Bank Balances (18.82%): Improved cash reserves, enhancing liquidity
Decreased:
 Secured Loans (12.23%): Repayment of secured debts, reducing financial leverage
 Total Liabilities (16.52%): Reduced obligations, improving financial health
 Gross Block (2.52%): Lower capital investment, possibly conservative approach
 Net Block (45.70%): Significant reduction in net fixed assets, likely due to asset sales or
higher depreciation
57
 Inventories (0.93%): Slightly lower stock, suggesting efficient inventory management

 Sundry Debtors (40.82%): Better collection of receivables, improving liquidity
 Loans & Advances (45.15%): Fewer advances given, possibly tighter credit policies
 Net Current Assets (4.39%): Slightly lower working capital, potentially impacting
liquidity
Reasoning:The company has strengthened its capital base and improved financial stability.
Reduced liabilities and improved cash reserves indicate better financial management. Lower
net fixed assets and fewer advances given may indicate a more conservative approach.
Solution: Continue to monitor and manage working capital to ensure liquidity. Evaluate the
impact of new borrowings on financial stability.Consider strategies to maintain or improve
cash reserves and reduce reliance on debt.
Overall, the company has made significant improvements in its financial health, but should
continue to monitor its working capital and debt levels to ensure sustained stability.
Karthikeya software solutions private limited
Comparative balance sheet
As on 31 march 2021
(Rs in.crores)
st
Particulars 31 march2020 31 st march2021 Absolute Change % Change
(Rs.) (Rs.) (increas/decreas) (increase/decrease)
58
Share Capital 45,889,000 52,789,000 6,900,000 15.0%
Secured Loans 15,635,873. 87 21,250,349.34 5,614,475.47 35.9%
Unsecured Loans 48,101,788. 42 49,200,788.43 1,099,000.01 2.3%
Total Liabilities 130,288,711.43 143,051,377.22 12,762,654.79 9.8%
Gross Block 65,736,662. 37 78,451,137.74 12,714,475.37 19.3%
Depreciation 34,807,001. 49 39,942,635.40 5,135,633.91 14.8%
Net Block 34,463,566. 16 36,305,827.00 5,642,260.84 17.9%
Inventories 102,053,323.43 107,002,422.40 18,949,009.97 4.8%
Sundry Debtors 2,265,368.4 2 2,205,025.83 -60,342.59 -2.7%
Cash & Bank balances 4,311,945.9 4 5,314,661.18 11,345,718.24 23.2%
Loans & Advances 168,014,203.95 199,359,922.81 25,576,756.10 21.3%
Current Liabilities 120,187,446.93 145,764,22.03 4,768,938.99 9.8%
Net Current Assets 48,826,757. 03 53,595,696.02 5,768,939.76 12.1%
2021 comparative balance sheet using with python code:

import pandas as pd
data = {
'Particulars': [
'Sundry Debtors', 'Cash & Bank balances',
'Loans & Advances', 'Current Liabilities', 'Net
Current Assets'
],
'31st March 2020': [
59
45889000, 772049.26, 156635873.87, 48101788.42,

130288711.43, 65736662.37, 34807001.49, 34463556.16,
102053323.43, 2265368.42, 4311945.94, 168014203.95,
120187446.93, 48826757.03 ],
'31st March 2021': [
52789000, 782239.47, 21250349.34, 49200788.43,
143051377.22, 78451137.74, 39942635.40, 36305827.00,
107002422.40, 2205025.83, 5314661.18, 199359922.81,
145764226.03, 53595696.02 ]
}
# Plot the data
plt.title('Comparative Balance Sheet as on
31st March 2020 and 31st March 2021')
# Display the chart
plt.tight_layout()
plt.show()
60
From the analysis, it was found that the company for the year of (2020 & 2021)
Comparative Balance Sheet:
Increased:
 Share Capital (15.0%): Additional equity raised, strengthening capital structure
 Reserves & Surplus (1.3%): Modest profit retention, enhancing financial stability
 Secured Loans (35.9%): Significant new borrowings for expansion
 Unsecured Loans (2.3%): Slight new borrowings, maintaining financial flexibility
 Gross Block (19.3%): Substantial capital investment in fixed assets, suggesting expansion
 Depreciation (14.8%): Higher depreciation expense, possibly due to new asset additions
 Net Block (17.9%): Rise in net fixed assets value, indicating asset growth
 Inventories (4.8%): Higher stock levels, possibly preparing for higher sales
 Cash & Bank Balances (23.2%): Improved liquidity
 Loans & Advances (21.3%): More advances given, possibly due to increased business
activities
61
 Current Liabilities (9.8%): Higher short-term obligations, possibly due to increased

operational activities
 Net Current Assets (12.1%): Higher working capital, improving liquidity
Reason:The company has strengthened its capital structure and financial stability.Significant
new borrowings and capital investments suggest expansion.Improved liquidity and working
capital indicate better financial management.
Solution: Continue to monitor and manage working capital to ensure sustained liquidity.
Evaluate the impact of new borrowings on financial stability.Consider strategies to maintain
or improve cash reserves and reduce reliance on debt.
Overall, the company has made significant progress in strengthening its financial position and
expanding its operations. However, it should continue to monitor its debt levels and working
capital to ensure sustained financial health.
KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE LIMITED

COMPARATIVE BALANCE SHEET
AS ON 31ST MARCH 2022
(Rs. In Crores)
Particulars 31ST MARCH 31ST MARCH Absolute Change %Change

2021 (Rs.) 2022 (Rs.)
Share Capital 52,889,000 62,889,000 10,000,000 18.9%
62
Secured Loans 19,625,873.87 20,250,349.34 624,475.47 3.2
Unsecured Loans 49,100,788.40 49,100,788.40 20,000,000.00 4.2%
Total Liabilities 120,298,711.53 143,051,377.21 22,752,665.68 18.9%
Gross Block 66,726,662.27 79,351,137.74 12,624,475.47 18.9%
Depreciation 34,807,001.49 39,942,635.40 5,135,633.91 14.8%
Net Block 31,563,001.16 37,205,827.00 5,642,260.84 17.9%
Inventories 92,053,323.43 107,002,423.80 14,949,100.37 16.2%
Sundry Debtors 1,285,368.42 2,205,025.83 919,657.41 71.6%
Cash & Bank balances 3,311,945.94 5,314,661.18 2,002,715.24 6.0%
Loans & Advances 188,014,203.95 199,359,922.81 11,345,718.86 12.0%
Current Liabilities 130,187,446.93 145,764,226.03 15,576,779.10 6.86%
Net Current Assets 47,826,757.02 53,595,696.78 5,768,939.76 12.1%
2022 comparative balance sheet using with python code:

import pandas as pd

data = {
'Particulars': [
'Sundry Debtors', 'Cash & Bank balances', 'Loans &
Advances', 'Current Liabilities', 'Net Current
Assets'
],
'31st March 2021': [
63
52889000, 673049.26, 19625873.87, 49100788.40, 120298711.53,

66726662.27, 34807001.49, 31563001.16, 92053323.43,
1285368.42, 3311945.94, 188014203.95, 130187446.93,
47826757.02 ],
'31st March 2022': [
62889000, 811239.47, 20250349.34, 49100788.40, 143051377.21,
79351137.74, 39942635.40, 37205827.00, 107002423.80,
2205025.83, 5314661.18, 199359922.81, 145764226.03, 53595696.78
]
}

# Plot the data


plt.title('Comparative Balance Sheet as on 31st
March 2021 and 31st March 2022')
# Display the chart

plt.tight_layout()
plt.show()
64
From the analysis, it was found that the company for the year of (2021 & 2022)Comparative
Balance Sheet:
Increased:
 Share Capital (18.9%): New equity raised, strengthening capital base
 Reserves & Surplus (20.5%): Improved profit retention, enhancing financial stability
 Gross Block (18.9%): Substantial capital investment in fixed assets, suggesting expansion
 Net Block (17.9%): Rise in net fixed assets value, indicating asset growth
 Inventories (16.2%): Higher stock levels, possibly preparing for higher sales
 Sundry Debtors (71.6%): Higher receivables, possibly indicating increased sales or slower
collections
 Loans & Advances (12.0%): More advances given, possibly reflecting increased business
activities
Decreased: None
65
Reasoning:The company has strengthened its capital base and financial stability.Substantial capital
investments and asset growth suggest expansion. Improved liquidity and working capital indicate
better financial management. Higher receivables may indicate increased sales or slower collections.
Solution:Continue to monitor and manage working capital to ensure sustained liquidity.Evaluate the
impact of new borrowings on financial stability. Consider strategies to maintain or improve cash
reserves and reduce reliance on debt.Investigate the cause of higher receivables and address any
collection issues.
expanding its operations. However, it should continue to monitor its debt levels and working capital
to ensure sustained financial health.
KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE LIMITED

COMPARATIVE BALANCE SHEET
AS ON 31ST MARCH 2023
(Rs. In Crores)
Particulars 31 st march2022 31 st march2023 Absolute Change %

(Rs.) (Rs.) Change
Share Capital 62,889,000 72,779,000 9890000 15.72%
Secured Loans 20,793,153.40 48,250,349.34 27457195.94 132.4

%
Unsecured Loans 49,100,788.40 59,100,788.40 10,000,000.00 20.37%
66
Total Liabilities 171,337,800.85 143,051,377.21 -28,286,423.64 -16.5%
Gross Block 79,351,137.74 79,351,137.74 – –
Depreciation 39,942,635.40 39,942,635.40 – –
Net Block 37,205,827.00 37,205,827.00 – –
Inventories 107,002,423.80 109,002,423.80 – –
Sundry Debtors 2,205,025.83 3,305,025.83 1,100,000 49.91%
Cash & Bank 5,314,661.18 6,314,661.18 1,000,000 18.81%

balances
Loans & Advances 199,359,922.81 209,359,922.81 10,000,000 5.02%
Current Liabilities 145,764,226.03 155,764,226.03 10,000,000 6.86%
Net Current Assets 53,595,696.78 56,595,696.78 3,000,000 5.59%
2023 –year comparative balance sheet using with python code:

import pandas as pd
data = {
'Particulars': [
'Sundry Debtors', 'Cash & Bank balances',
'Loans & Advances', 'Current Liabilities', 'Net
Current Assets'
],
'31st March 2022': [
62889000, 554589.05, 20793153.40, 49100788.40,
171337800.85, 79351137.74, 39942635.40, 37205827.00,
107002423.80, 2205025.83, 5314661.18, 199359922.81,
145764226.03, 53595696.78 ],
'31st March 2023': [
72779000, 811239.47, 48250349.34, 59100788.40,
143051377.21, 79351137.74, 39942635.40, 37205827.00,
67
109002423.80, 3305025.83, 6314661.18, 209359922.81,

155764226.03, 56595696.78 ]
}
# Plot the data
plt.title('Comparative Balance Sheet as on
31st March 2022 and 31st March 2023')
# Display the chart
plt.tight_layout()
plt.show()
68
From the analysis, it was found that the company 2022 vs. 2023 Comparative Balance Sheet:
Increased:
 Share Capital (15.72%): Additional equity raised, strengthening capital structure
 Reserves & Surplus (46.3%): Significant profit retention, enhancing financial stability
 Secured Loans (132.4%): Substantial new borrowings for expansion
 Unsecured Loans (20.37%): New borrowings, reflecting financial flexibility
 Sundry Debtors (49.91%): Higher receivables, possibly indicating increased sales or
slower collections
 Loans & Advances (5.02%): More advances given, possibly reflecting increased business
activities
Decreased:
 Total Liabilities (16.5%): Reduction in obligations, improving financial health
No Change:
69
 Gross Block
 Depreciation
 Net Block
Reasoning:The company has strengthened its capital structure and financial
stability.Substantial new borrowings and higher receivables suggest expansion. Improved
liquidity and working capital indicate better financial management.Reduction in total
liabilities improves financial health.
Solution: Continue to monitor and manage working capital to ensure sustained
liquidity.Evaluate the impact of new borrowings on financial stability.Consider strategies to
maintain or improve cash reserves and reduce reliance on debt.Investigate the cause of higher
receivables and address any collection issues.
expanding its operations. However, it should continue to monitor its debt levels and working
capital to ensure sustained financial health.
4.1.16 All 5 years comparative income statement:

Comparative income statement
As on 31 st march 2019
(Rs in. Crores)
Absolute Percentage
31st march 31 st march 2019
Particulars Increase/Decrease Increase/Decrease
2018(₹) (₹)
(₹) (%)
Sales 416,808,490.06 618,385,014.11 +201,576,524.05 +48.36%
Other Income 888,774.07 267,542.21 -621,231.86 -69.90%
70
Closing Stock of Finished

28,774,830.00 17,409,578.66 -11,365,251.34 -39.49%
Goods
Total Income 446,472,094.13 636,062,134.98 +189,590,040.85 +42.45%
Opening Stock of Finished
9,387,421.57 28,774,830.00 +19,387,408.43 +206.55%
Goods
Raw-Material Consumed 351,607,389.15 510,030,408.47 +158,423,019.32 +45.05%
Power & Fuel 8,176,276.00 7,237,612.31 -938,663.69 -11.48%
Excise Duty & Sales Tax 29,854,259.78 36,703,661.14 +6,849,401.36 +22.94%
Payments & Benefits to

11,983,887.50 13,739,287.75 +1,755,400.25 +14.65%
Employees
Selling & Administrative

19,341,559.60 20,970,942.53 +1,629,382.93 +8.42%
Expenses
Interest & Bank Charges 6,643,298.53 7,495,156.07 +851,857.54 +12.83%
Depreciation 4,743,541.86 4,864,366.10 +120,824.24 +2.55%
Total Expenditure 441,737,633.99 630,266,264.37 +188,528,630.38 +42.67%
Operating Profit / Loss 4,734,460.14 5,795,870.61 +1,061,410.47 +22.43%
Less: Provision for
186,332.00 766,307.00 +579,975.00 +311.18%
Taxation
Transfer from Reserve 128,190.21 128,190.21 0 0
Net Profit After Tax/Loss 4,676,318.35 5,157,753.82 +481,435.47 +10.30%
Balance Brought Forward (60,478,730.77) (55,802,412.42) +4,676,318.35 +7.73%
Balance Carried to
(55,802,412.42) (50,644,658.60) +5,157,753.82 +9.25%
Balance Sheet
From the analysis, it was found that the company for the year of (2019 vs 2018)
Income statement:
 Sales: Increased significantly by 48.36%, reflecting a strong growth trajectory.
 Other Income: Decreased by 69.90%, suggesting a decline in non-operating income
sources.
 Total Income: Grew by 42.45%, primarily driven by the increase in sales.
 Total Expenditure: Increased by 42.67%, almost in line with total income growth.
 Net Profit After Tax: Rose by 10.30%, indicating that despite higher expenses, the
company managed to achieve a healthy profit growth.
Overall: The company experienced robust sales growth, which significantly boosted total
income and net profit, even though other income decreased sharply.
71

As on 31 st March 2020
(Rs in. Crores)
Percenta
Absolute ge
31 st March 2019 31 st march
Particulars Increase/Decrease Increase/
(₹) 2020 (₹)
(₹) Decrease
(%)
Sales 982,955,385.12 869,982,555.98 -112,972,829.14 -11.50%
Other Income 1,222,762.88 1,222,762.88 0 0.00%
Closing Stock of Finished Goods 13,534,674.00 12,227,762.88 -1,306,911.12 -9.65%
72
Total Income 997,712,822.00 883,433,081.74 -114,279,740.26 -11.45%

Opening Stock of Finished Goods 12,227,762.88 13,534,674.00 +1,306,911.12 +10.69%
Raw-Material Consumed 727,853,927.07 544,853,927.07 -183,000,000.00 -25.14%
Power & Fuel 11,618,563.88 8,618,563.88 -3,000,000.00 -25.82%
Excise Duty & Sales Tax 50,838,720.16 40,838,720.16 -10,000,000.00 -19.67%
18,719,920.70 15,719,920.70 -3,000,000.00 -16.02%
Employees
Selling & Administrative Expenses 33,629,170.68 30,629,170.68 -3,000,000.00 -8.92%
Interest & Bank Charges 10,677,891.90 9,677,891.90 -1,000,000.00 -9.37%
Depreciation 5,254,659.95 5,154,659.95 -100,000.00 -1.90%
Total Expenditure 871,321,617.22 669,027,528.54 -202,294,088.68 -23.21%
Operating Profit / Loss 126,391,204.78 214,405,553.20 +88,014,348.42 69.64%
Less: Provision for Taxation 2,144,068.00 2,544,068.00 +400,000.00 +18.66%
Transfer from Reserve 128,190.21 128,190.21 0 0.00%
Net Profit After Tax/Loss 124,119,346.99 211,733,295.20 +87,613,948.21 70.61%
Balance Brought Forward (35,341,693.04) (36,551,499.95) -1,209,806.91 -3.42%
Balance Carried to Balance
(40,382,472.90) (38,384,996.01) +1,997,476.89 +4.95%
Sheet
Income statement:
 Sales: Dropped by 11.50%, indicating potential market challenges or loss of customers.
 Total Income: Fell by 11.45%, aligning closely with the drop in sales.
 Total Expenditure: Decreased by 23.21%, reflecting significant cost-cutting measures.
 Net Profit After Tax: Surged by 70.61%, driven by a substantial reduction in expenses.
Overall: Despite a decrease in sales and total income, the company effectively reduced its
expenditures, leading to a significant increase in net profit.
(Rs in. Crores)
Absolute Percentage
31 st march 2020 31 st march 2021
Particulars Increase/Decreas Increase/Decreas
(₹) (₹)
e (₹) e (%)
Sales 663,397,498.90 678,154,935.78 +14,757,436.88 +2.22%
73
Other Income 1,222,762.88 1,222,762.88 0 0.00%

Total Income 678,154,935.78 691,605,461.54 +13,450,525.76 +1.98%
Opening Stock of Finished Goods 17,409,578.66 13,534,674.00 -3,874,904.66 -22.25%
Power & Fuel 8,618,563.88 9,618,563.88 +1,000,000.00 +11.60%
15,719,920.70 16,719,920.70 +1,000,000.00 +6.36%
Employees
Selling & Administrative Expenses 29,629,170.68 30,629,170.68 +1,000,000.00 +3.37%
Interest & Bank Charges 8,677,891.90 9,677,891.90 +1,000,000.00 +11.52%
Depreciation 5,054,659.95 5,154,659.95 +100,000.00 +1.98%
Less: Provision for Taxation 944,068.00 1,144,068.00 +200,000.00 +21.19%
Net Profit After Tax/Loss 6,180,244.57 9,527,714.99 +3,347,470.42 +54.16%
Balance Carried to Balance
(44,869,408.03) (35,341,693.04) +9,527,714.99 +21.23%
Sheet
Income statement:
 Sales: Increased slightly by 2.22%, showing signs of market stabilization.
 Total Income: Rose by 1.98%, consistent with the modest sales growth.
 Total Expenditure: Increased by 1.48%, indicating controlled expense growth.
 Net Profit After Tax: Jumped by 54.16%, demonstrating improved profitability.
Overall: The company managed to stabilize its sales and income while keeping expenses
under control, leading to a significant improvement in net profit

(Rs in. Crores)
Absolute Percentage
Particulars 31st march 2021(₹) 31 st march2022(₹)
Increase/Decreas(₹) Increase/Decreas(%)
74
Sales 618,385,014.11 663,397,498.90 +45,012,484.79 +7.28%

Other Income 267,542.21 1,222,762.88 +955,220.67 +357.06%
Total Income 636,062,134.98 678,154,935.78 +42,092,800.80 +6.62%
Power & Fuel 7,237,612.31 8,618,563.88 +1,380,951.57 +19.07%
Payments & Benefits to Employees 13,739,287.75 15,719,920.70 +1,980,632.95 +14.41%
Selling & Administrative Expenses 20,970,942.53 29,629,170.68 +8,658,228.15 +41.29%
Depreciation 4,864,366.10 5,054,659.95 +190,293.85 +3.91%
Less: Provision for Taxation 766,307.00 944,068.00 +177,761.00 +23.19%
Transfer from Reserve 128,190.21 128,190.21 0 0
Net Profit After Tax/Loss 5,157,753.82 5,775,250.57 +617,496.75 +11.98%
Balance Carried to Balance Sheet (50,644,658.60) (44,869,408.03) +5,775,250.57 +11.40%
From the analysis, it was found that the company for the year of (2022 vs 2021)Income statement:
⮚ Sales: Grew by 7.28%, continuing the positive trend.
⮚ Total Income: Increased by 6.62%, slightly trailing sales growth.
⮚ Total Expenditure: Grew by 6.45%, reflecting disciplined expense management.
⮚ Net Profit After Tax: Increased by 11.98%, indicating healthy profit growth.
Overall: The company maintained a growth trajectory in sales and income while effectively managing expenses, resulting in
improved profitability.

As 31 st march 2023
(Rs in.crores)
Particulars 31 st march 31 st march 2023 Absolute Percentage
2022 (₹) (₹) Increase/Decrease Increase/Decrease
(₹) (%)
Sales 663,397,498.90 982,955,385.12 +319,557,886.22 +48.15%
Other Income 1,222,762.88 1,222,762.88 0 0.00%
Closing Stock of FinishedGoods 12,227,762.88 13,534,674.00 +1,306,911.12 +10.69%
75
Total Income 676,848,024.66 997,712,822.00 +320,864,797.34 +47.40%

Power & Fuel 9,618,563.88 11,618,563.88 +2,000,000.00 +20.79%
Payments & Benefits to Employees 16,719,920.70 18,719,920.70 +2,000,000.00 +11.97%
Selling & AdministrativeExpenses 30,629,170.68 33,629,170.68 +3,000,000.00 +9.79%
Depreciation 5,154,659.95 5,254,659.95 +100,000.00 +1.94%
Operating Profit / Loss (4,179,503.88) 126,391,204.78 +130,570,708.66 +3124.73%
Less: Provision for Taxation 1,144,068.00 2,144,068.00 +1,000,000.00 +87.42%
Net Profit After Tax/Loss (5,451,381.88) 124,119,346.99 +129,570,728.87 +2377.13%
Balance Carried to Balance Sheet (50,320,789.91) (36,551,499.95) +13,769,289.96 +27.37%
From the analysis, it was found that the company for the year of (2023 vs 2022)Income
statement:
 Sales: Skyrocketed by 48.15%, indicating a significant market expansion or new product success.
 Total Income: Jumped by 47.40%, in line with the sales increase.
 Total Expenditure: Rose by 27.94%, but at a slower rate than income growth.
 Net Profit After Tax: Rebounded dramatically by 2377.13%, from a loss to a substantial profit.
Overall: The company achieved an exceptional turnaround with a massive increase in sales and
income, coupled with a proportionate rise in expenditures, leading to a remarkable recovery in net
profit.
5 years comparative income statement using with python code:
import pandas as pd
# Sample data from the PDF
data = {
'Year': [2018, 2019, 2020, 2021, 2022, 2023],
'Sales': [416808490.06, 618385014.11, 869982555.98, 678154935.78, 663397498.90, 982955385.12],
'Other Income': [888774.07, 267542.21, 1222762.88, 1222762.88, 1222762.88, 1222762.88],
76
'Closing Stock of Finished Goods': [28774830.00, 17409578.66, 12227762.88, 12227762.88,

13534674.00, 13534674.00],
'Total Income': [446472094.13, 636062134.98, 883433081.74, 691605461.54, 678154935.78,
997712822.00],
'Raw-Material Consumed': [351607389.15, 510030408.47, 544853927.07, 552853927.07,
544853927.07, 727853927.07],
'Total Expenditure': [441737633.99, 630266264.37, 669027528.54, 680805488.34, 670902433.00,
871321617.22],
'Net Profit After Tax': [4676318.35, 5157753.82, 21173329.20, 9527714.99, 5775250.57,
124119346.99]
}
# Creating a DataFrame
df.set_index('Year', inplace=True)
# Plotting
fig, ax1 = plt.subplots(figsize=(14, 8))
# Bar chart for Sales, Total Income, Total Expenditure
ax1.bar(df.index - 0.2, df['Sales'], width=0.2, color='b', align='center', label='Sales')
ax1.bar(df.index, df['Total Income'], width=0.2, color='g', align='center', label='Total Income')
ax1.bar(df.index + 0.2, df['Total Expenditure'], width=0.2, color='r', align='center', label='Total
Expenditure')
# Line chart for Net Profit After Tax
ax2 = ax1.twinx()
ax2.plot(df.index, df['Net Profit After Tax'], color='m', marker='o', label='Net Profit After Tax')
# Labels and title
ax1.set_xlabel('Year')
ax1.set_ylabel('Amount in ₹ Crores')
ax2.set_ylabel('Net Profit After Tax in ₹ Crores')
plt.title('Comparative Income Statement (2018-2023)')
ax1.legend(loc='upper left')
ax2.legend(loc='upper right')
<matplotlib.legend.Legend at 0x7fa754968280>
77
Python tool using over all summary:

Karthikeya Software Solutions Private Limited demonstrated resilience and adaptability over the five
years, with periods of significant growth, strategic cost management, and a remarkable recovery in
profitability by 2023. The company's ability to stabilize and grow sales, manage expenses, and
ultimately achieve a substantial profit underscores its strong financial management and market
positioning.
4.1.15&16. Introduction to Common Size Financial Statements
78
Common size financial statements are a tool used in financial analysis to present all items in
the income statement and balance sheet as a percentage of a common base figure. For the
income statement, each item is expressed as a percentage of total revenue, while for the
balance sheet, each item is expressed as a percentage of total assets. This standardization
allows for easy comparison between companies of different sizes or the same company across
different periods.
The common size ratio for each line on the financial statement is calculated as follows:
The ratios often are expressed as percentages of the reference amount.
Common size statements usually are prepared for the income statement and balance sheet,
expressing information as follows:
• Income statement items -expressed as a percentage of total revenue
• Balance sheet items - expressed as a percentage of total assets
Comparisons between Companies (Cross-Sectional Analysis)
Cross-sectional analysis involves comparing the common size financial statements of

multiple companies at the same point in time. This method is particularly useful for:
⮚ Benchmarking: Comparing a company against industry leaders or best-performing

companies.
⮚ Identifying Strengths and Weaknesses: Revealing areas where a company may be
over or under-performing relative to its peers.
⮚ Investment Analysis: Assisting investors in making informed decisions by
comparing potential investment opportunities.
Features of Common Size Statement
79
⮚ Proportional Representation: Common size statements convert absolute figures into

percentages, making it easier to analyze the relative size and trends of different
components.
⮚ Comparison Across Periods: By expressing financial statement items as
percentages, it's easier to compare financial performance across different periods or
fiscal years.
⮚ Vertical Analysis: Common size statements facilitate vertical analysis, which
examines the relationship between different items in a single period's financial
statement.
⮚ Benchmarking: These statements are useful for comparing a company's performance
to industry benchmarks or competitors.
⮚ Simplifies Complex Data: They help in simplifying the complex financial data into a
more understandable format.
Limitations of Common Size Financial Statements
5. Different Accounting Policies: Variations in accounting policies between companies

can distort comparisons. Adjustments may be necessary to make the data comparable.
6. Different Accounting Periods: Companies may use different fiscal years,
complicating direct comparisons.
7. Lack of Context: While common size statements show relative size, they do not
provide context or reasons for changes in percentages.
8. Ignore External Factors: They do not account for external economic factors that
might influence the financial statements.
9. Potential Misleading Analysis: Percentages alone might be misleading without
considering absolute values and the overall context of the business.
Common size financial statements provide a valuable tool for analyzing and comparing the
financial performance of companies, but they should be used in conjunction with other
python analytical tools and financial information for a comprehensive analysis.
4.1.15 All 5 years common size Balance Sheet:
80
Common size balance sheet

As 31 st march 2019
(Rs In. Crores)
Particulars 31 st march 2019 Percentage of Total

Amount (Rs.) Assets (2019)
Share Capital 62,889,000 36.70%
Reserves & Surplus 554,589.05 0.32%
Secured Loans 48,793,153.40 28.47%
Unsecured Loans 59,100,788.40 34.51%
Total Liabilities 171,337,800.8 5 100.00%
Gross Block 79,351,137.74 46.32%
Depreciation 39,942,635.40 23.31%
Net Block 37,205,827.00 21.71%
Inventories 107,002,423.8 0 62.45%
Sundry Debtors 2,205,025.83 1.29%
Cash & Bank balances 5,314,661.18 3.10%
Loans & Advances 199,359,922.8 1 116.39%
Current Liabilities 145,764,226.0 3 85.07%
Net Current Assets 53,595,696.78 31.29%
From the analysis, it was found that the company For The Year Of (2019)
Common Size Balance Sheet:
⮚ Share Capital (36.70%): A significant portion of the company’s assets is financed by equity.
⮚ Secured and Unsecured Loans (62.98% combined): The Company relies heavily on
borrowed funds.
⮚ Inventories (62.45%): A large part of assets is tied up in inventories.
81
⮚ Net Current Assets (31.29%): Positive, indicating liquidity to meet short-term obligations.
(Rs in. Crores)
Particulars 31st March 2020 (Rs.) Percentage of Total Assets

(2020)
Share Capital 82,779,000.00 31.91%
Secured Loans 18,250,349.34 7.04%

Unsecured Loans 59,100,788.40 22.79%
Total Liabilities 143,051,377.21 55.14%
Gross Block 77,351,137.74 29.82%
Depreciation 40,942,635.40 15.78%
Net Block 20,205,827.00 7.79%
Inventories 106,002,423.80 40.87%
Sundry Debtors 1,305,025.83 0.50%
Cash & Bank Balances 6,314,661.18 2.43%
Loans & Advances 109,359,922.81 42.16%
Current Liabilities 155,764,226.03 60.07%
From The Analysis, It Was Found That The Company For The Year Of (2020)Common
Size Balance Sheet:
⮚ Share Capital (31.91%): A decrease in the percentage of equity financing compared

to the previous year.
⮚ Secured and Unsecured Loans (29.83% combined): Reduction in reliance on
borrowed funds.
⮚ Inventories (40.87%): Still a significant part of assets but decreased compared to
2019.
82
⮚ Net Current Assets (21.82%): Positive, though a slight decrease from 2019.
(Rs in. Crores)
Particulars 31st March 2021 (Rs.) Percentage of Total Assets (2021)
Share Capital 52,789,000.00 14.98%
Secured Loans 21,250,349.34 6.03%
Unsecured Loans 49,200,788.42 13.96%
Gross Block 78,451,137.74 22.27%
Depreciation 39,942,635.40 11.34%
Net Block 36,305,827.00 10.30%
Inventories 107,002,423.40 30.37%
Sundry Debtors 2,205,025.83 0.63%
Loans & Advances 199,359,922.81 56.58%
From the analysis, it was found that the company for the year of (2021)Common Size
Balance Sheet:
⮚ Share Capital (14.98%): Further reduction in equity financing.

⮚ Secured and Unsecured Loans (19.99% combined): Further reduction in borrowed funds.
⮚ Inventories (30.37%): Inventories form a smaller portion of assets.
⮚ Net Current Assets (15.21%): Further decrease, but still positive.

83
(Rs in. Crores)
Particulars 31st March 2022 (Rs.) Percentage of Total Assets

(2022)
Share Capital 62,889,000.00 27.96%
Secured Loans 20,793,153.40 9.25%
Unsecured Loans 49,100,788.40 21.83%
Gross Block 79,351,137.74 35.27%
Depreciation 39,942,635.40 17.76%
Net Block 37,205,827.00 16.54%
Inventories 107,002,423.80 47.58%
Sundry Debtors 2,205,025.83 0.98%
Loans & Advances 199,359,922.81 88.65%

From the analysis, it was found that the company for the year of (2022)
common size balance sheet:
⮚ Share Capital (27.96%): Increase in equity financing.

⮚ Secured and Unsecured Loans (31.08% combined): Increase in borrowed funds.
⮚ Inventories (47.58%): Significant portion of assets in inventories.
⮚ Net Current Assets (23.83%): Improved liquidity position.
Karthikeya software solutions private limited Common size

balance sheet
(Rs in. Crores)
Particulars 31st March 2023 Percentage of Total Assets

(Rs.) (2023)
84
Share Capital 72,779,000.00 36.46%
Secured Loans 48,250,349.34 24.17%
Unsecured Loans 59,100,788.40 29.60%
Gross Block 79,351,137.74 39.75%
Depreciation 39,942,635.40 20.01%
Net Block 37,205,827.00 18.64%
Inventories 109,002,423.80 54.61%
Sundry Debtors 3,305,025.83 1.66%
Loans & Advances 209,359,922.81 104.87%

From the analysis, it was found that the company for the year of (2023)common size
balance sheet:
⮚ Share Capital (36.46%): Return to higher equity financing.

⮚ Secured and Unsecured Loans (53.77% combined): Higher reliance on borrowed funds.
⮚ Inventories (54.61%): Inventories are a significant part of assets.
⮚ Net Current Assets (28.35%): Improved liquidity compared to previous years.
Common size balance sheets 2019 to 2023 using with python code:
import pandas as pd
# Data from the PDF

data = {
'Particulars': [
'Share Capital', 'Reserves & Surplus', 'Secured Loans',
'Unsecured Loans', 'Gross Block', 'Depreciation', 'Net Block',
'Inventories',
'Sundry Debtors', 'Cash & Bank balances', 'Loans & Advances',
'Current Liabilities', 'Net Current Assets'
85
],
'2019': [36.70, 0.32, 28.47, 34.51, 46.32, 23.31, 21.71, 62.45, 1.29, 3.10, 116.39,
85.07, 31.29], '2020': [31.91, 0.31, 7.04, 22.79, 29.82, 15.78, 7.79, 40.87, 0.50,
2.43, 42.16, 60.07, 21.82], '2021': [14.98, 0.22, 6.03, 13.96, 22.27, 11.34, 10.30,
30.37, 0.63, 1.51, 56.58, 41.37, 15.21], '2022': [27.96, 0.25, 9.25, 21.83, 35.27,
17.76, 16.54, 47.58, 0.98, 2.36, 88.65, 64.82, 23.83], '2023': [36.46, 0.41, 24.17,
29.60, 39.75, 20.01, 18.64, 54.61, 1.66, 3.16, 104.87, 78.01, 28.35] }
# Creating a DataFrame
# Setting 'Particulars' column as index

# Plotting
df.plot(kind='bar', figsize=(15, 8))

plt.title('Common Size Balance Sheet (2019-2023)')
plt.ylabel('Percentage of Total Assets')
# Display the plot

plt.tight_layout()
plt.show()
86
Python tool using overall summary:
Karthikeya Software Solutions Private Limited has experienced notable shifts in its financial
structure over the past five years. The fluctuations in equity and debt financing indicate
changes in the company's capital strategy. The consistent presence of significant inventory
levels highlights a potential area for improving liquidity. However, the company has
managed to maintain positive net current assets, ensuring it can meet its short-term liabilities.
This common size analysis provides valuable insights into the company's financial health and
strategic adjustments over time.
4.1.16 All 5 years common size income statement:

common size income statement
87
As on 2019
(Rs In. Crores )
Particulars 31 st march 2019 (₹) Percentage of Sales (%)
Sales 982,955,385.12 100.00%

Other Income 1,222,762.88 0.12%
Closing Stock of Finished 13,534,674.00 1.38%
Goods
Total Income 997,712,822.00 101.50%
Opening Stock of Finished 12,227,762.88 1.24%
Goods
Raw-Material Consumed 727,853,927.07 74.03%
Power & Fuel 11,618,563.88 1.18%
Excise Duty & Sales Tax 50,838,720.16 5.17%
Payments & Benefits to 18,719,920.70 1.90%
Employees
Selling & Administrative 33,629,170.68 3.42%
Expenses
Interest & Bank Charges 10,677,891.90 1.09%
Depreciation 5,254,659.95 0.53%
Total Expenditure 871,321,617.22 88.62%
Operating Profit / Loss 126,391,204.78 12.86%
Less: Provision for Taxation 2,144,068.00 0.22%
Transfer from Reserve 128,190.21 0.01%
Net Profit After Tax/Loss 124,119,346.99 12.63%
Common size income Statement:
⮚ Sales: All revenue is from sales, providing a baseline for comparison (100%).
⮚ Other Income: Contributes minimally (0.12%), suggesting reliance on core business
operations for revenue.
⮚ Raw Material Consumed: Major expense (74.03%), indicating high production
costs.
⮚ Total Expenditure: Accounts for 88.62% of sales, leaving a good margin for profit.
⮚ Net Profit After Tax: Healthy profit margin (12.63%).

Common size income statement
88
As on 2020
Rs in. Crores
Percentage of Sales
Particulars 31 st march 2020 (₹)
(%)
Sales 416,808,490.06 100.00%
Other Income 888,774.07 0.21%
Closing Stock of Finished Goods 28,774,830.00 6.90%
Total Income 446,472,094.13 107.11%
Opening Stock of Finished Goods 9,387,421.57 2.25%
Power & Fuel 8,176,276.00 1.96%
Payments & Benefits to Employees 11,983,887.50 2.88%
Selling & Administrative Expenses 19,341,559.60 4.64%
Depreciation 4,743,541.86 1.14%
Less: Provision for Taxation 186,332.00 0.04%
⮚ Sales: Maintained as the base (100%).
⮚ Other Income: Slight increase to 0.21%, still minimal.
⮚ Raw Material Consumed: Increased significantly to 84.37%, showing rising
production costs.
⮚ Total Expenditure: Rose to 106.00% of sales, indicating expenses surpassed
revenues.
⮚ Net Profit After Tax: Dropped sharply to 1.12%, reflecting tight profit margins.
As on 2021
(Rs in. Crore)
31 st march2021 Percentage of Sales
Particulars
(₹) (%)
89
Sales 663,397,498.90 100.00%

Other Income 1,222,762.88 0.18%
Total Income 678,154,935.78 102.22%
Power & Fuel 8,618,563.88 1.30%
Depreciation 5,054,659.95 0.76%
Operating Profit / Loss (2,872,592.76) -0.43%
Net Profit After Tax/Loss (4,144,850.97) -0.62%
⮚ Sales: Standard base (100%).
⮚ Other Income: Slight decrease to 0.18%.
⮚ Raw Material Consumed: Reduced slightly to 82.12%, but still high.
⮚ Total Expenditure: Increased to 102.65%, resulting in higher expenses than revenue.
⮚ Net Profit After Tax: Negative (-0.62%), indicating a loss for the year.
As on 2022
(Rs in. Crore)
31 st march 2022 Percentage of Sales
Particulars
(₹) (%)
Sales 618,385,014.11 100.00%
Other Income 267,542.21 0.04%
90

Total Income 636,062,134.98 102.85%
Power & Fuel 7,237,612.31 1.17%
Depreciation 4,864,366.10 0.79%
Less: Provision for Taxation 766,307.00 0.12%
⮚ Sales: Base value (100%).
⮚ Other Income: Dropped significantly to 0.04%, indicating less non-core income.
⮚ Raw Material Consumed: Remained high at 82.47%.
⮚ Total Expenditure: Lowered to 101.84%, but still higher than revenue.
⮚ Net Profit After Tax: Slightly positive at 0.83%, showing marginal profitability.
As on 2023
(Rs in. Crore)
Percentage of
Particulars 31 st march 2023 (₹)
Sales (%)
Sales 678,154,935.78 100.00%
Other Income 1,222,762.88 0.18%
91

Total Income 691,605,461.54 101.80%
Power & Fuel 9,618,563.88 1.42%
Depreciation 5,254,659.95 0.78%
⮚ Sales: Maintained as the base (100%).
⮚ Other Income: Increased back to 0.18%, similar to earlier years.
⮚ Raw Material Consumed: Slightly reduced to 81.50%.
⮚ Total Expenditure: Reduced to 100.36%, almost balancing revenue.
⮚ Net Profit After Tax: Improved to 1.41%, indicating better profitability.
5 years Common size income statement using with python code:

import pandas as pd
# Data extracted from the PDF

data = {
"Year": [2019, 2020, 2021, 2022, 2023],
"Sales": [982955385.12, 416808490.06, 663397498.90, 618385014.11, 678154935.78],
"Other Income": [1222762.88, 888774.07, 1222762.88, 267542.21, 1222762.88],
"Raw Material Consumed": [727853927.07, 351607389.15, 544853927.07, 510030408.47,
552853927.07],
"Total Expenditure": [871321617.22, 441737633.99, 681027528.54, 630266264.37,
680805488.34],
92
"Net Profit After Tax": [124119346.99, 4676318.35, -4144850.97, 5157753.82,

9527714.99]
}
# Create DataFrame
# Plotting bar chart for each year

# Bar chart
bar_width = 0.35
index = df['Year']
bar1 = ax1.bar(index - bar_width/2, df['Sales'], bar_width, label='Sales')
bar2 = ax1.bar(index + bar_width/2, df['Total Expenditure'], bar_width, label='Total
Expenditure')
# Adding labels
ax1.set_ylabel('Amount (in Crores)')
ax1.set_title('Sales vs Total Expenditure (2019-2023)')
ax1.set_xticks(index)
ax1.set_xticklabels(df['Year'])
ax1.legend()
# Plotting line chart for Net Profit After Tax

ax2 = ax1.twinx()
line1 = ax2.plot(df['Year'], df['Net Profit After Tax'], color='red', marker='o', label='Net
Profit After Tax')
ax2.set_ylabel('Net Profit After Tax (in Crores)')
# Adding labels
lines, labels = ax1.get_legend_handles_labels()
lines2, labels2 = ax2.get_legend_handles_labels()
93
ax2.legend(lines + lines2, labels + labels2, loc='upper left')
plt.show()
Python tool using overall summary:
⮚ Revenue Consistency: Sales remained the primary source of revenue throughout the years.
⮚ Non-core Income: Other income contributed minimally, indicating dependency on core
business.
⮚ High Production Costs: Raw material costs consistently constituted a large portion of
expenses, affecting profitability.
⮚ Fluctuating Profit Margins: The company faced challenges in maintaining profitability,
with years of both net profits and losses.
94
⮚ Expense Management: Total expenditure often exceeded or closely matched revenue,

highlighting the need for better cost control measures.
This analysis provides insights into the company’s cost structure and profitability trends, emphasizing
the importance of managing raw material costs and overall expenditures to improve financial
performance.
4.1.17. TREND ANALYSIS

Trend analysis calculates the percentage change for one account over a period of time of two
years or more.
Percentage change
To calculate the percentage change between two periods:
● Calculate the amount of the increase/ (decrease) for the period by subtracting the
earlier year from the later year.
● If the difference is negative, the change is a decrease and if the difference is positive,
it is an increase.
● Divide the change by the earlier year's balance. The result is the percentage change.
Trend percentages
To calculate the change over a longer period of time the following is the formula for
calculating trend for the data:
Trend Percentage = ((Current Period Value - Base Period Value) /

Base Period Value) * 100.
Ye = a + b(X)
regression formula is:
Y = β0 + β1X + ε
95
4.1.17A) Table Trend analysis for Net Sales
Year Net Sales (%) X = X-A X2 2XY

2018 100.00 0.00 0 0.00
2019 148.36 48.36 2,338.51 7,177.30
2020 208.67 108.67 11,808.27 22,680.83
2021 162.66 62.66 3,924.76 10,189.14
2022 159.17 59.17 3,501.08 9,417.51
2023 235.83 135.83 18,452.81 31,983.47
Python code:
import numpy as np
from scipy.stats import linregress
# Data
years = np.array([2018, 2019, 2020, 2021, 2022, 2023])
net_sales = np.array([100.00, 148.36, 208.67, 162.66, 159.17, 235.83])
# Linear regression
slope, intercept, r_value, p_value, std_err = linregress(years, net_sales)
trend_line = slope * years + intercept
# Plot
bars = plt.bar(years, net_sales, color='lightblue', alpha=0.7, label='Net Sales Data')
plt.plot(years, trend_line, 'r-', label=f'Trend Line: y = {slope:.2f}x + {intercept:.2f}')
# Annotate bars
for bar in bars:
plt.text(bar.get_x() + bar.get_width() / 2, bar.get_height() + 5, f'{bar.get_height():.2f}',
ha='center', va='bottom')
96
plt.xlabel('Year')
plt.ylabel('Net Sales')
plt.title('Net Sales and Trend Analysis')
plt.legend()
plt.grid(True, linestyle='--', alpha=0.7)
plt.tight_layout()
plt.show()
# Print results
print(f"Slope: {slope:.2f}")
print(f"Intercept: {intercept:.2f}")
print(f"R-squared: {r_value**2:.2f}")
4.1.17A) chart Trend analysis for Net Sales
Slope: 19.02 Intercept: -38253.29 R-squared: 0.56
From the analysis, it was found that the company The net sales increased significantly from 100.00 in
2018 to 235.83 in 2023.There was a notable peak in 2020 at 208.67 followed by a decline in 2021 to
162.66, then a slight dip in 2022 to 159.17, and a substantial rise in 2023 to 235.83.
Slope: The average annual increase in net sales is 19.02 units.

R-squared value: 0.56, suggesting a moderate correlation between time and net sales.
97
The overall trend shows a general increase in net sales over the period, indicating positive growth in
revenue. The peaks and troughs suggest periods of strong performance followed by minor setbacks,
likely influenced by market conditions or internal factors.
98
4.1.17B) Table Trend analysis for Net profit

Year Net Profit (%) X = X-A X2 2XY
2018 100.00 0.00 0.00 0.00
2019 110.30 10.30 106.09 11.34
2020 4527.69 4427.69 19,601,366.92 3,202,018.93
2021 203.64 103.64 10,742.85 21,109.82
2022 123.49 23.49 551.62 2,898.29
2023 2654.53 2554.53 6,525,658.50 339,728.22
Python code:
import numpy as np
# Data
years = np.array([2018, 2019, 2020, 2021, 2022, 2023])
net_profit = np.array([100.00, 110.30, 4527.69, 203.64, 123.49, 2654.53])
# Linear regression
slope, intercept, r_value, p_value, std_err = linregress(years, net_profit)
# Percentage changes
percent_changes = np.diff(net_profit) / net_profit[:-1] * 100
# Plot
# Plot net profit data and trend line

ax1.plot(years, net_profit, 'o', label='Net Profit Data')
ax1.plot(years, trend_line, 'r-', label=f'Trend Line: y = {slope:.2f}x + {intercept:.2f}')
ax1.set_ylabel('Net Profit')
ax1.set_title('Net Profit and Percentage Change Analysis')
ax1.grid(True)
ax1.set_yscale('log')
# Plot percentage changes on a second y-axis

ax2 = ax1.twinx()
99
ax2.bar(years[1:], percent_changes, alpha=0.3, color='r', label='Percentage Change')

ax2.set_ylabel('Percentage Change (%)')
plt.tight_layout()
plt.show()
# Print results
4.1.17B) chart Trend analysis for Net Profit
From the analysis, it was found that the company The net profit shows an average annual increase of
242.52 units, indicating a general upward trend. However, the low R-squared value of 0.06
suggests significant fluctuations and weak correlation with time. This implies that net profit is
highly volatile and influenced by various external and internal factors, leading to inconsistent
performance. To improve stability, the company should address the underlying causes of this
volatility and aim for more consistent profitability.
100
4.1.17C) Table Trend analysis for return on net worth (RONW)
Year RoNW (%) X - X-A X² XY

2019 2.58 2.58 6.66 16.93
2020 96.24 96.24 9,261.18 926.12
2021 4.54 4.54 20.60 93.53
2022 2.51 2.51 6.30 15.82
2023 49.65 49.65 2,465.92 123.15
PYTHON CODE:
import numpy as np
# Data
years = np.array([2019, 2020, 2021, 2022, 2023])
ronw = np.array([2.58, 96.24, 4.54, 2.51, 49.65])
# Linear regression
slope, intercept, r_value, p_value, std_err = linregress(years, ronw)
percent_changes = np.diff(ronw)
# Plot
# Bar chart for RoNW data

bars = ax1.bar(years, ronw, alpha=0.7, color='lightblue', label='RoNW Data')
# Trend line
# Annotate bars
for bar in bars:
plt.text(bar.get_x() + bar.get_width() / 2, bar.get_height() + 2, f'{bar.get_height():.2f}',

ax2 = ax1.twinx()
ax2.bar(years[1:], percent_changes, alpha=0.3, color='g', label='Percentage Change')
# Labels and title

ax1.set_ylabel('Return on Net Worth (RoNW) (%)')
ax1.set_title('RoNW and Percentage Change Analysis')
101
ax1.grid(True)
plt.tight_layout()
plt.show()
# Print results
4.1.17C) chart Trend analysis for Return On Networth:
From the analysis, it was found that the company The RONW increased drastically from 2.58% in
2019 to 96.24% in 2020.There was a sharp decline to 4.54% in 2021, followed by another
decrease to 2.51% in 2022, and a significant rise to 49.65% in 2023.]
Slope: The minimal average annual increase suggests a lack of consistent growth.
R-squared value: 0.00, indicating no significant trend.

The RONW is highly inconsistent, showing significant volatility. The sharp fluctuations
suggest that the company's ability to generate returns on shareholders' equity is unpredictable
and subject to significant variation, likely due to inconsistent profitability or changing capital
structure.
4.1.17D) Table.Trend analysis for Earnings per Share:
102
EPS X - X-
Year X² XY
(₹) A
2019 0.52 0.52 0.27 0.14
2020 21.17 21.17 448.16 226.70
2021 0.95 0.95 0.90 0.89
2022 0.58 0.58 0.34 0.20
2023 12.41 12.41 154.08 37.35
Python code
import numpy as np
# Data
years = np.array([2019, 2020, 2021, 2022, 2023])
eps = np.array([0.52, 21.17, 0.95, 0.58, 12.41])
# Linear regression
slope, intercept, r_value, p_value, std_err = linregress(years, eps)
percent_changes = np.diff(eps) / eps[:-1] * 100
# Plot
# Bar chart for EPS data

bars = ax1.bar(years, eps, alpha=0.7, color='lightblue', label='EPS Data')
# Trend line
# Annotate bars
for bar in bars:
plt.text(bar.get_x() + bar.get_width() / 2, bar.get_height() + 0.5, f'{bar.get_height():.2f}',

ax2 = ax1.twinx()
ax2.bar(years[1:], percent_changes, alpha=0.3, color='g', label='Percentage Change')
# Labels and title

ax1.set_ylabel('EPS (₹ per Share)')
ax1.set_title('EPS and Percentage Change Analysis')
ax1.grid(True)
plt.tight_layout()
plt.show()
103
# Print results
4.1.17D) chart Trend analysis for Earnings per Share:
+++++From the analysis, it was found that the company EPS showed a massive increase from ₹0.52 in 2019 to
₹21.17 in 2020.This was followed by a significant drop to ₹0.95 in 2021 and ₹0.58 in 2022, then a substantial
rise to ₹12.41 in 2023.
Slope: The slight average annual increase suggests only minimal long-term growth.
R-squared value: 0.00, showing no significant trend.
EPS is extremely erratic with sharp rises and falls. This indicates that the company's profitability on a per-share
basis is highly variable, reflecting inconsistent earnings
performance which could be due to fluctuations in net income, changes in the number of outstanding shares, or
other operational factors.
104
CHAPTER-5
5.1 FINDINGS
5.2 SUGGESTIONS
5.3 CONCLUSION
105
5.1 FINDINGS:
 The firm’s current ratio in years 2018-19, 2019-2020 is lower than its standard norms
and in the years 2020-2021 To 2022-2023 the ratio is higher than the standard ratio of
2:1.
 Debt-Equity ratio is fluctuating year by year; it increases from 2.63 to 3.31 in the
periods in between 2018-19, decreased in the year 2021-2022 and again increased in
the period 2022-2023.
 Gross profit of the company is fluctuating throughout the study period, in the year
2019-2020 the gross profit declined to 17.41%.
 In the study period the working capital turnover ratio was continuously fluctuating
because of variations in the requirements of working capital from year to year.
 The Inventory Turnover ratio is increasing every year, in 2018-2019 it is 2.82 and in
2022-2023 it is recorded as 3.49.
 Share Capital: Grew from ₹52.89 million in 2021 to ₹72.78 million in 2023.
 Reserves and Surplus: Increased from ₹90 million in 2021 to ₹130 million in 2023.
 Revenue: Rose from ₹369.4 million in 2021 to ₹644.72 million in 2023.
 Net Profit: Jumped from ₹30 million in 2021 to ₹70 million in 2023.
 Operating Expenses: Grew from ₹260 million in 2021 to ₹400 million in 2023.
 Operating Profit Margin: Improved from 12% in 2021 to 14% in 2023.
 Sales Growth: Strong growth, especially from international market expansion.
 Fixed Assets Turnover Ratio: Increased from 1.53 in 2021 to 2.28 in 2023.
 Total Assets Turnover Ratio: Improved from 0.91 in 2021 to 1.20 in 2023.
 Karthikeya Software Solutions' strong financial health, robust growth, and efficient
asset utilization.
5.2 SUGGESTIONS
 Continue Market Expansion Leverage the success in international markets to

further expand global reach and diversify revenue streams.
106
 Optimize Operational Efficiency Focus on managing operating expenses to

maintain and improve profit margins.
 Enhance Asset Utilization Invest in technology and processes that maximize the
use of assets to generate higher returns.
 Strengthen Financial Position Continue building reserves and surplus to ensure
long-term financial stability and support future growth.
 Invest in Innovation Allocate resources to research and development to stay ahead
of industry trends and maintain a competitive edge.
These strategies will help sustain growth, improve profitability, and ensure long-term success
for Karthikeya Software Solutions.
5.3 Conclusion:
Karthikeya Software Solutions Private Limited demonstrates good financial performance
with strong liquidity ratios and effective debt management, albeit with some fluctuations.
However, there is room for improvement in cash reserves, inventory management, and profit
margins. The company's strategic focus on market expansion, technology investment, and
customer relationship management positions it well for sustained growth. Enhancing
employee development and implementing regular financial monitoring will further strengthen
the company's operational efficiency and long-term success. Overall, the company
demonstrates strong financial performance with effective asset management and liquidity,
positioning it well for future growth.
REFERENCE
❖ M. PANDEY (2005), “financial management”, ninth edition vikas publishing house Pvt
ltd.
107
❖ S. N. MAHESWARI (2006), “financial and management accounting”, fifth edition, sultan

chand and sons, New Delhi.
❖ C. R. KOTHARI, “research methodology and techniques”. Second edition, new Agency
international pvt ltd.
❖ BAKER. R .P & HOW WELL. A.C, “the preparation of reports”, New York Ronald
press.
❖ S.P. GUPTHA (1995), “statistical methods, “sultan chand and, co New Delhi.
❖ AHUJA H.L, “economic environment of business, macroeconomic analysis“, chand

&company ltd, New Delhi, 2005.
WEB SITES
www.karthikeyasolutions.com
www.zaubacorp.com
www.indiafilings.com.
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FINANCIAL STATEMENT ANALYSIS

Financial statement analysis is the process of reviewing and interpreting a

Use Python for Financial Statement Analysis:

3. Common size Statement

Financial Analysis can be undertaken by management of the firm or by parties

2.1 INDUSTRY PROFILE

The information technology (IT) industry in India comprises Information Technology

2.2 COMPANY PROFILE

Company Total GDP (in Crores):

 Company overall turnover 5 cr.

Tirupati, Andhra Pradesh.

2.3 THEEORITICAL FRAMEWORK

Quality and Certifications:

MISSION OF KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE

VISION OF KARTHIKEYA SOFTWARE SOLUTIONS PRIVATE

To be a global leader in IT services and software solutions, known

"For sustained growth, we plan to:

3.1 NEED OF THE STUDY:

o Profit and loss account (income statements)

4. Assess overall financial strength

❖ Inter Firm Analysis

Comparison of two or more company’s financial data is known as inter-firm analysis.

Intra –Firm Analysis:

Horizontal And Vertical Analysis:

Matplotlib Tool And Techniques Of Financial Performance Analysis:

The relationship between two accounting figures, expressed mathematically, is known

Utility of Ratio Analysis

● The ability of the firm to meet its current obligations;

Diagnostic Role of Ratios

1. How effectively does a company utilize its assets in generating sales?

1. Fixed Assets Turn Over Ratio

Generally, two major types of profitability ratios are calculated:

⮚ Profitability in relation to sales

⮚ Profitability in relation to investment.

4.1 DATA ANALYSIS AND INTERPRETATION

1). LIQUIDITY RATIOS

4.1.1. CURRENT RATIO

4.1.1 Table Current Ratio

# Plotting the bar chart

# Adding the standard ratio line

# Adding labels and title

# Adding the ratio values on top of the bars

4.1.1 Current Ratio Over Years Chart

4.1.2. QUICK RATIO

4.1.2. Table Quick Ratio

# Plotting the bar chart

# Adding the standard ratio line

# Adding labels and title

plt.title('Quick Ratio Over Years')

# Adding the ratio values on top of the bars

4.1.2. Quick Ratio Chart

4.1.3. CASH RATIO

4.1.3. Table Cash Ratio

# Plotting the bar chart

# Adding the standard ratio line

# Adding labels and title

# Adding the ratio values on top of the bars

for bar in bars:

Gross Profit Ratio (GPR) = (Gross Profit / Net Sales) x 100

# Plotting the bar chart

# Adding the standard ratio line

# Adding labels and title

# Adding the ratio values on top of the bars

4.1.4 Gross Profit Margin Chart

4.1.5 Operating Profit Margin

Operating Profit Margin (OPM) = (Operating Profit / Net Sales) x 100

# Plotting the bar chart

# Adding the standard ratio line

# Adding labels and title

# Adding the ratio values on top of the bars

4.1.6 Net Profit Margin Ratio

Net Profit Margin (NPM) = (Net Profit / Net Sales) x 100

4.1.6 Table Net Profit Margin Ratio

# Plotting the bar chart

# Adding the standard ratio line

# Adding labels and title