ANALYSIS OF FINANCIAL PERFORMANCES AT MILMA PATHANAMTHITTA DIARY

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1 ANALYSIS OF FINANCIAL PERFORMANCES AT MILMA PATHANAMTHITTA DIARY M.ARUN UNNITHAN 1 & S.BALAMURUGAN 2 1,2 Department of Management Studies, Periyar Maniammai University, Thanjavur. ABSTRACT The financial statements are the indicators to a company s performance and health. This shows how a business is functioning and very useful for a company s stockholders such as its board of directors, managers, employees and labor unions. Externally, they are useful to the prospective investors, to government agencies for tax and regulation, to banks and credit rating agencies, and to analysts and stockbrokers. The importance of financial reporting for companies is to give information about the fiscal health and financial performance. Investors use financial reports to gauge the past and current performances and financial position. This allows for comparison of one firm with another and forms a basis for evaluating the worth of a stock. Financial statement analysis is a common method involves in technique that allows knowing the company & openal performance by the business owners. The primary objectives of financial statements are for decision making. Here the financial statement for Kerala Co-operative Milk Marketing Feden is diagnosed to judge the profitability and financial soundness of the firm. Keywords: Financial performance, Financial statement, Ratio analysis, Profitability, Liquidity I. INTRODUCTION Milma or KCMMF (Kerala Co-operative Milk Marketing Feden) was start functioning from April 198. The head quarter is at Thiruvananthapur. The marketing channel is designed to supply surplus milk from rural areas to deficit urban areas. It serves hard to ensure maximum returns to the producer community and quality milk products to the user community. And thus sustains in the market with stable price for the dairy farmers, who produce. KCMMF has association with National Dairy Development Board, Amul, Government of Kerala and the KLD Board. The KCMMF market the products under the brand 'milma' and allows the Regional Unions to market the products under the same brand name. The marketing functions of Milma are Consumer pricing, Lean/flush season management, bulk trading, promotion etc. The KCMMF involves in bulk purchases of dairy consumables and raw materials from Cattle Feed plants. The KCMMF further offers technical and legal assistance to primary societies along with the quality supply of products, and redresses the customer complaints. The financial functions of Milma are recommending remunen to co operative society employees, liaison with Government and Financial institutions, etc. 7

2 II. REVIEW OF LITERATURE Dejan, T. and Andre, D. (29) has conducted the study on the strategic and financial analysis in the oil industry. They identified that Petrobras strengths by far outmatch its threats and ensure in providing the value to shareholder of the company in the long-run. P.D. Erasmus (21) has identified that there is significant negative relationships between the firm s profitability with its net trade cycle (NTC), liquidity and debt. They also found that the liquidity s and debt s plays a more important role than net trade cycle. B.S. YOGESHA AND B. MAHADEVAPPA (211) have conducted study on Value Added Ratios of Indian Oil Corpon Ltd. They have calculated the Value added s by analyzing the value added statements. They suggested that to improve the current accounting practice, the profit and loss account is to be restarted with value added statements. Pawan Kumar et al. (213) identified that the financial performances are improved by minimizing the expenses and by concentrating on the current and quick s. III. OBJECTIVES OF THE STUDY The main objective of the study is to find out the overall financial performance of Milma Dairy, Pathanamthitta To find out liquidity, profitability, solvency and performance of the firm of the concern by using various s. Research Design 1. Method of data collection - Secondary Data 2. Tools for data Analysis - Ratio Analysis IV. DATA ANALYSIS & INTERPRETATION 1. LIQUIDITY RATIOS: The analysis of Liquidity comprises of Current, quick and Absolute liquidity as shown in Table 1 and Figure 1. Table 1 Comparison on Liquidity Ratios Current Absolute Quick Ratio liquidity (Source: Annual report of MILMA from to ) 8

3 Current Ratio Quick Absolute liquidity Figure 1 Pictorial representation of Liquidity Interpretation on Liquidity Ratio: The analysis of Liquidity s indicates that the liquidity position of the firm is not sound. 2. LEVERAGE RATIOS The analysis of Leverage comprises of Debt-equity, Proprietary and Solvency as shown in Table 2 and Figure 2. Table 2 Comparison on Leverage Ratios Year Debt-equity Proprietary Solvency (Source: Annual report of MILMA from ) Debt-equity Proprietary Solvency Figure 2 Pictorial representation of Leverage 9

4 Interpretation on Leverage Ratio: The Debt-equity indicates that the firm is not sound good according to debt and equity is concern. The proprietary is found to be satisfied only for the financial year & 29-21, since the is found higher than the standard norm of 1.2. The solvency is found to be satisfied for all the financial years covered under study. The standard norm for the solvency is 33.33% or.33. It is inferred that the Milma has the ability to meet its total liabilities with its total assets. 3. ACTIVITY RATIOS The analysis of Activity comprises of Inventory turnover and Working capital turnover as shown in Table 3 and Figure 3. Table 3 Comparison on Activity Ratios Year Inventory turnover Working capital turnover Inventory turnover Working capital turnover Figure 3 Pictorial representation of Activity 1

5 Interpretation on Activity Ratio: The inventory turnover is not found satisfactory for any of these 5 years. The standard norm for the inventory turnover is taken as 8 times. The on 213 is found increased to 5.8; it indicates that there is a hope for the improvement in management of inventory. The working capital turnover is not found satisfactory for any of these 5 years. It indicates that the short term funds were not managed properly. 4. PROFITABILITY RATIOS The analysis of Profitability comprises of Gross profit, Net profit and Return on capital employed as shown in Table 4 and Figure 4. Table 4 Comparison on Profitability Ratios Year Gross profit Net profit Return on capital employed (Source: Annual report of MILMA from to Gross profit Net profit Return on capital employed Figure 3 Pictorial representation of Profitability Interpretation on Profitability Ratio: The gross profit was high during the year 29 and found decreased during 213. The net profit was not found higher than the standard norm during any of these years. This is well-known for measuring the overall firm s profitability. 11

6 The return on capital employed is not efficient in achieving profitability of business on the basis of capital employed. V. CONCLUSION The study reveals that the total financial position, financial performance and profitability of mlima, Pathanamthitta diary is not found good and not satisfactory in this regard. But the findings indicate that the performance in terms of profitability of the firm can be further improved. The performances can be further improved through suggestions provided in the wholesome approach, which can be implemented in a phased manner. VI. REFERENCES Dejan Talevski and Andre Diogenes Lacet de Lima(29), Strategic and financial analysis in the oil industry: Petrobras shareholders value potential and fair value of stock, Master Programme thesis, Aarhus School of Business, Aarhus University. Erasmus, P. D(21) Working Capital Management and Profitability: The Relationship between the Net Trade Cycle and Return on Assets, Management Dynamics, Vol.19, No.1. B.S. Yogesha and B. Mahadevappa(211). Analysis of Value Added Ratios of Indian Oil Corpon Ltd., IOSR Journal of Humanities and Social Science (IOSR-JHSS) Volume 19, Issue 11, Ver. V (Nov. 214), Pp Pawan Kumar, V. K. Gupta and Anil Kumar Goyal (213). Financial Analysis of Indian Oil Limited International Journal of Research in Commerce & Management, Volume No. 4, Pp M. Y. Khan & P. K. T. Jain, Financial management, Tata McGraw Hill publications co.ltd, 7 th Edition, Pp