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    Analysis of Financial Statements of Tata Steel: Bachelor of Business Administration

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    1) The document presents a project synopsis analyzing the financial statements of Tata Steel over 6 years. 2) The objectives are to analyze profitability, asset management, short-term and long-term financial position, and make recommendations. 3) Methods used include ratio analysis, comparative balance sheets, income statements, and trend analysis of secondary financial data.

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    Analysis of Financial Statements of Tata Steel: Bachelor of Business Administration

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    varun raj
    113 views5 pages
    1) The document presents a project synopsis analyzing the financial statements of Tata Steel over 6 years. 2) The objectives are to analyze profitability, asset management, short-term and long-term financial position, and make recommendations. 3) Methods used include ratio analysis, comparative balance sheets, income statements, and trend analysis of secondary financial data.

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    1) The document presents a project synopsis analyzing the financial statements of Tata Steel over 6 years. 2) The objectives are to analyze profitability, asset management, short-term and long-term financial position, and make recommendations. 3) Methods used include ratio analysis, comparative balance sheets, income statements, and trend analysis of secondary financial data.

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    Download as docx, pdf, or txt
    113 views5 pages

    Analysis of Financial Statements of Tata Steel: Bachelor of Business Administration

    Uploaded by

    varun raj
    1) The document presents a project synopsis analyzing the financial statements of Tata Steel over 6 years. 2) The objectives are to analyze profitability, asset management, short-term and long-term financial position, and make recommendations. 3) Methods used include ratio analysis, comparative balance sheets, income statements, and trend analysis of secondary financial data.

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    © All Rights Reserved
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    of 5

    ANALYSIS OF FINANCIAL STATEMENTS OF

    TATA STEEL

    BACHELOR OF BUSINESS ADMINISTRATION

    By

    SARWADAMAN SINGH (17BBA010)


    VAIBHAV KUMAR RANA (17BBA012)
    AMIT KUMAR (17BBA038)

    USHA MARTIN UNIVERSITY, JHARKHAND


    (Established by Jharkhand Government under Sec.2(f) of UGC Act 1956)

    FACULTY OF COMMERECE & BUSINESS MANAGEMENT

    2020

    PROJECT SYNOPSIS
    • TITLE OF THE PROJECT
    Analysis of financial statements of tata steel
    • INTRODUCTION -
    Financial statement: - Financial Statement Analysis is a method of reviewing and analyzing a
    company’s accounting reports (financial statements) in order to gauge its past, present or projected future
    performance. This process of reviewing the financial statements allows for better economic decision
    making.
    Globally, publicly listed companies are required by law to file their financial statements with the relevant
    authorities. Firms are also obligated to provide their financial statements in the annual report that they
    share with their stakeholders. As financial statements are prepared in order to meet requirements, the
    second step in the process is to analyze them effectively so that future profitability and cash flows can be
    forecasted.
    Users of financial statement analysis: -
    • Management: -The managers of the company use their financial statement analysis to
    make intelligent decisions about their performance.
    • Owners: - Small business owners need financial information from their operations to
    determine whether the business is profitable.
    • Investors: -People who have purchased stock or shares in a company need financial
    information to analyze the way the company is performing.
    • Creditors: -Creditors are interested in knowing if a company will be able to honor its
    payments as they become due.
    • Government: -Governing and regulating bodies of the state look at financial statement
    analysis to determine how the economy is performing in general so they can plan their
    financial and industrial policies

    Methods of financial statement analysis: -


    Horizontal Analysis: - Horizontal analysis is used in financial statement analysis to compare
    historical data, such as ratios, or line items, over a number of accounting periods. Horizontal
    analysis can either use absolute comparisons or percentage comparisons, where the numbers in
    each succeeding period are expressed as a percentage of the amount in the baseline year, with the
    baseline amount being listed as 100%. This is also known as base-year analysis.

    Vertical Analysis: - Vertical analysis is a method of financial statement analysis in which each
    line item is listed as a percentage of a base figure within the statement. Thus, line items on an
    income statement can be stated as a percentage of gross sale, while line items on a balance sheet
    can be stated as a percentage of total assets or liabilities, and vertical analysis of a cash flow
    statement shows each cash inflow or outflow as a percentage of the total cash inflows.

    • RATIONALE OF THE STUDY


    Nowadays the GDP of India is 2.72 lakh crore USD (According to 2018) which is gradually increasing
    year per year, that's why we are very eager to do the research i.e. Analysis of financial statement of tata
    steel to find the financial statement of tata steel and how tata steel is contributing to the economic growth
    of the developing India. Also, we want to know that whether tata steel is growing and flourishing among
    their rivals or not.

    • REVIEW OF LITERATURE
    In a comparative study of financial performance analysis, Singla (2013) analyzed financial performance
    of two leading steel companies in Indian steel industry, SAIL and TATA steel, for a period of five years
    from 2007-08 to 2011-12. Various financial ratios like current ratio, quick ratio, inventory turnover ratio,
    operating ratio, gross profit ratio, net profit ratio, dividend payout ratio etc, under category of liquidity,
    profitability and working capital, were used for the analysis. Result of the study revealed that profitability
    and inventory management of TATA steel was better than that of SAIL.
    Altman Z score model was used by Ramaratnam and Jayaraman (2010) to examine the financial
    soundness of selected steel companies of Indian steel industry. The study covered a period of five years
    from 2006 to 2010. Various financial ratios used in Altman Z-score were calculated and statistical
    techniques such as ANOVA test etc were applied to the ratios to test consistency, stability and overall
    trends in different ratios. Finally, it was concluded that all selected units were financially sound during the
    study period while operating efficiency of JSW steel and TATA steel was good.

    Another study was conducted by Takeh & Navaprabha (2015) to analyze the impact of capital structure
    on financial performance of selected Indian steel companies for a period from 2007 to 2012. Multiple
    regression model, correlation matrix, ANOVA and descriptive statistics were used for data analysis. OPM,
    ROA, ROE and ROCE were used as indicators of financial performance (dependent variables) while
    TDER, TADR, ICR and FDR were used as indicators of capital structure (independent variables). The
    result indicated that capital structure had significantly impacted financial performance of Indian steel
    Industry. Correlation results confirmed negative relationship between capital structure and financial
    performance measures.

    Sinku & Kumar (2014) attempted to review the financial performance of Steel Authority of India
    Limited (SAIL). The study was purely based on secondary data conducted for a period of five years from
    2005-06 to 2009-10. The data were tabulated, analyzed and interpreted with the help of various financial
    ratios and Multivariate Discriminate Analysis (MDA) developed by Prof. Edward I. Altman (1968). It was
    observed from the analysis of various ratios that the profit earning capacity, liquidity position and long-
    term solvency position of SAIL was quite good during the study period and the level of bankruptcy
    position was also very low.

    In another study, Kavitha and Palanivelu (2014) investigated factors affecting steel industry based on
    profitability model. Analysis was done for a period of ten years starting from 2002-2003 to 2011-2012.
    Twenty one firms were taken for the study out of 227 iron and steel firms working in India out of which
    168 were listed in stock exchanges in India. ANOVA was used to find whether there was any significant
    difference between liquidity, leverages and efficiency positions of the firms under study during the
    selected period of time. It was found that quick ratio, debt equity ratio, proprietary ratio, fixed asset to
    net-worth ratio and inventory turnover ratio had impacted profitability positions of the steel firms. It was
    suggested that Companies could reduce the interest burden by giving quality products and should build
    brand image to increase the profit. It was also suggested that the firms should utilize maximum
    production capacity and should try to increase production and sales for maximization of profit and to
    strengthen financial position.

    • RESEARCH OBJECTIVE
    • To analyses the profitability of the business
    • To analyses the asset management of the firm.
    • To analyses the short term and long-term financial position of the firm.
    • To make recommendation based on the analysis of financial statements.
    • RESEARCH METHODOLOGY
    6.1 Research Design
    The performance evaluation of an enterprise may be conducted by making a comparative study of its
    own records and an attractive approach would here to analyses the firm's objectives and performance
    against absolute standard of efficiency. The study was conducted on the basis of financial data from
    published records and other books with both primary and secondary data. (i.e. published financial
    statements of last 6 years, and other relevant books and accounts of the firm.)

    6.2 Data Collection Method/Tools (Questionnaires)


    Secondary Data: -annual reports of tata steel.

    6.3 Data Analysis Tools & Techniques


    The study makes use of techniques like
    • Comparative balance sheet and income statements
    • Common size balance sheet and income statements
    • Profitability ratio
    • Liquidity ratio
    • Activity ratio
    Simple mathematical tools like
    • Averages
    • Percentage
    Accounting tools like
    • Ratios
    • Trend analysis & statistical tools were also used for this analysis

    • Limitations:
    • The Sample Size is very small. Only 5 data were analyzed. So, there is a possibility of occurrence
    of some sampling errors. If the sample were large and representative, the observation would have
    become more credible.
    • It considers only monetary factors; non-monetary factors are not considered.
    • The time allowed for the study is less.
    • It has been conducted by using secondary data

    References:
    http://www.dissertationideas.co.uk/Finance/Analysis-of-Financial-Statements-of-XYZ-Company.php

    SINGLA (2013) A COMPARATIVE STUDY OF FINANCIAL PERFORMANCE OF SAIL AND TATA STEEL
    LTD. INTERNATIONAL MANUSCRIPT ID: ISSN23194618-V2I1M11-012013,

    Retrieved from: - https://docplayer.net/20316915-A-comparative-study-of-financial-performance-


    of-sail-and-tata-steel-ltd.html

    M.S.Ramaratnam, R.Jayaraman (2010) A study on measuring the financial soundness of select


    firms with special reference to Indian steel industry. ASIAN JOURNAL OF
    MANAGEMENT RESEARCH , ISSN 2229 – 3795
    Retrieved from: - http://www.ipublishing.co.in/ajmrvol1no1/EIJMRS1056.pdf

    Takeh & Navaprabha (2015) CAPITAL STRUCTURE AND ITS IMPACT ON FINANCIAL
    PERFORMANCE OF INDIAN STEEL INDUSTRY Volume 6, Issue 6, June (2015),
    working paper: - pp. 29-38, Article ID: 10120150606004, Internationa Journal of
    Management (IJM) IAEME: http://www.iaeme.com/IJM.asp,
    Reverted from file: - http://www.iaeme.com/MasterAdmin/UploadFolder/CAPITAL
    %20STRUCURE%20AND%20ITS%20IMPACT%20ON%20FINANCIAL
    %20PERFORMANCE %20OF%20INDIAN%20STEEL%20INDUSTRY/CAPITAL
    %20STRUCURE%20AND%20ITS %20IMPACT%20ON%20FINANCIAL
    %20PERFORMANCE%20OF%20INDIAN%20STEEL%20INDUSTRY.pdf (2020)

    Sinku & Kumar (2014) Analysis of Financial Health of Steel Authority of India Limited
    www.iiste.org ISSN 2224-6096 (Paper) ISSN 2225-0581 (online) Vol.4, No.12, 2014.
    Reverted from file: - http://citeseerx.ist.psu.edu/viewdoc/download?
    doi=10.1.1.849.5720&rep=rep1&type=pdf (2020)

    Kavitha and Palanivelu (2014) A Study on Financial Performance of Iron and Steel Industries
    India Volume: 3 | Issue: 7 | July 2014 • ISSN No 2277 – 8179,
    Reverted from file: - https://www.worldwidejournals.com/international-journal-of-scientific-
    research-(IJSR)/fileview.php?val=July_2014_1404300285__27.pdf

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