Uma Industry Assets and Liabilities MGT

A STUDY ON ASSETS AND LIABILITIES MANAGEMENT
INTRODUCTION TO FINANCE
There is always confusion as to what finance and accounting mean. Many people
thinksr accounting is Finance and some think Finance and Economics are the same. In
reality, the two fields are different and they mean different and they mean different
things and those who study the two fields are expected to occupy different positions
Finance is the life blood of business. Without finance, the heart and brain of business
cannot function implying thereby its natural death. Right from conceiving the idea of
birth of business to its liquidation, finance is required. It is a prerequisite for obtaining
physical resources, which are needed to perform productive and carry business
operation such as sales, pay compensation, reserve for contingencies (unascertained
liquidities) and so on. So, finance is the pivot around which the whole business
operations cluster.
Finance is often defined as simply as management of money of “funds management

modern finance however is a family of business activities that includes the
origination, marketing and management of cash and money surrogates through a
variety of capital accounts, instruments and markets created for transacting and
trading assets, liabilities and risks. Finance is conceptualizes structure and regulated
by a complex system of power relations with political economics in the state of global
markets.
Finance is both art and science although these activities increasingly coverage
through the instant technical and institutional focus on measuring and heading risk
complex financial product and services for their own as well as their client’s account.
Finance performance measures assess the efficiency and profitability of investment,

the safety of debtor’s claim against the assets, likelihood that derivatives instruments
will protect the investors against the variety of market risks.
SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 1

Finance is regarded as the life blood of business enterprise, because of modern money
oriented economics; Finance is one of the basic foundations of all kinds of economic
activity. It is the master key that provides access to all the sources for being employed
in the manufacturing and merchandising activities. It has been rightly sad that
business needs money to make more money. However it is also true that business
houses get more money only when it is properly managed.
In general, business may be defined as “The provision of money at the time it is

needed”.
It is also defined as “Procurement of funds and their effective utilization”
ACCOUNTING
The American Accounting Association defines Accounting as “The process

identifying, measuring and communicating information to permit judgment and
decisions by the uses of account”.
FINANCE
Meaning of finance:
Finance may be defined as the provisions of money at the time when it is required.
Finance refers to the management of flow of money through an organization. It

concerns with the application of skills in the manipulation, use and control of money.
Definitions on finance:
According to John J. Hampton, “the term finance can be defined as the

management of flows of money through an organization, whether it will be a
corporation, school, bank or government agency”.

According to Howard and Upton, “Finance may be defined as that

administrative area or set of administrative functions in an organization which may
relates with management of each and credit so that the organization may have means
of carry out the objective as satisfactorily as possible”.
Before the industrial revolution finance was not considers so important for business
organization. Because methods production were very simple, labor was more
important than capital and finance at the time. Therefore, these things did not create
any problems. However, after industrial revolution, when methods of production were
introduced finance got much importance.
Nowadays, finance is considered as lifeblood of every business and has

achieved the most important place in today’s business. The business whether large
scale or small scale requires finance for its operations. Money is a universal lubricant
for any enterprise.
The term finance may thus incorporate any of the following:
 The study of money and other assets

 The management and control of those assets
 Profiling and managing project risks
 As a verb, “to finance” is to provide funds for the business

CLASSIFICATIONA OF FINANCE
The subject of finance has been traditionally classified into four classes
Finance
Public finance Private finance Institutional finance international finance
State government Personal finance
Local self-government Business finance
Central government Finance of non- profit organization
1 .Public finance: public finance deals with the requirements, receipts, and
disbursement of funds in the government institutions like states, local self,
government and central governments.
2. Private finance: Private finance is considered with requirements, receipts and

disbursement of funds in case of an individual, a profit seeking business organization
and non-profit organization. Thus, private finance can be classified into:
a. Personal finance: It deals with the analysis of principles and practices

involved in management one’s own daily need funds.
b. Business finance: The study of principles, practices, procedures and problems
concerning financial management of profit making undertaken under the
disciplines of business finance.
c. Finance of Non-profit organizations: The finance of non-profit
organizations concerned with the practice, procedures and problems involved
in financial management of charitable, religious, educational, social and other
similar organizations.

3. Institutional finance: New area of finance is developed keeping in view of

specific requirement of finance and solving the problems, i.e., development of
institutional finance.
4. International finance: This area of finance focuses attention on flow of funds

beyond national boundaries. Each country has its own currency and it has to be
exchanged into the currency of other countries for buying and selling goods and
services. Many government put restrictions on the exchange of currency and these
may affect business transactions.
AIMS OR GOALS OF FINANCE FUNCTION
The finance function has the following aims:
1. Assessing the financial requirements: The main objective of finance

function is to assess the financial needs of an organizations and then finding
out suitable sources for raising them. The sources are commensurate with the
needs of the business.
2. Proper utilization of funds: Through rising of funds it is important but their
effective utilization is more important. The funds should be used in such a
way that maximum benefits are derived by them; the returns from their use
should be more than their cost.
3. Increasing profitability: the planning and control of finance function aims at
increasing profitability, sufficient funds will have to be invested. Finance
function should be so planned that the concern neither suffers from
inadequacy of funds nor wastes more funds than required.
4. Maximizing value of the firm: finance function also aims at maximizing the
value of the firm. It generally said that concern’s value is linked with its
profitability.

SCOPE OF FINANCE FUNCTION
The scope of finance function is as following:
1. Estimation of financial requirements: the first task of financial manager is

to estimates short- term and long term financial requirements of his business.
2. Deciding a capital structure: The capital structure refers to the kind and
proportion of different securities for raising funds. After deciding about the
quantum of funds required it should be raised.
3. Selecting a source of finance: After preparing a capital structure, an
appropriate source of finance is selected. Various sources from which finance
may be raised, include share capital, debentures, financial institutions,
commercial banks, public deposits, etc
4. Selecting pattern of investment: When funds have been procure than a
decision about investment pattern is related to the use of funds. The decision
making techniques such as capital budgeting, opportunity cost analysis may
be applied in making decision about capital budgeting.
5. Proper cash management: Cash management is also an important task of
finance manager. He has to assess various cash needs at different times and
the make managements for arranging cash.
6. Implementing financial controls: an efficient system of financial
management necessitates the use of various control devices. Financial control
devices generally used is: a) returns an investment, b) budgeting control, c)
break even analysis, d) cost control, e) ratio analysis, f) cost and internal audit.

ORGANISATION STRUCTURE OF FINANCE FUNCTION

The organization of finance function in a big firm may appear as depicted in
the following figure. The ultimate responsibility of discharging the finance is
that of the board of directors which discharge this function through the Chief
Financial Officer (CFO).
Director (finance)
Finance manager Accounts

treasurer manager \
Budget Cash Credit Financial Tax Internal

division management management accounting management management
Capital expenditure
management
NATURE OF FINANCE FUNCTION
1. In most of the organizations, financial operations are centralized. This results

in economics.
2. They contribute to the survival & growth of the firm.
3. Finance functions are comprises control function also.
4. The central focus of finance function is valuation of firm.
5. Finance function is primarily involved with data analysis for use in decision
making.

FINANCIAL MANAGER
A financial manager is a person who is responsible, in a significant way, to carry out

the financial functions. It should be noted that, in a modern enterprise, the financial
manager occupies a key position.
FUNCTIONS OF FINANCIAL MANAGER
 He should anticipate the financial requirements.

 Allocation of funds.
 Analysis of the financial performance.
 Administrates the financial activities.
 Estimation of the financial requirements.
 Capital budgeting.
 Fair returns to the investors.
ROLE OF FINANCE MANAGER
The different role of a financial manager is as follows:
Role of financial manager
Determining financial needs
Choosing the source of funds
Cost volume profit analysis
Financial analysis and interpretation
Capital budgeting
Working capital management
Profit planning and control

1. Determining financial needs:
A financial manager is supposed to meet financial needs of the enterprise. For this
purpose, he should determine financial needs of the concern. Funds are needed to
meet promotional expenses, fixed and working capital needs.
2. Choosing the sources of funds:
A number of sources may be resort to issue of share capital and debentures. Financial
institutions may be requested to provide long- term funds. Finance manager has to be
very careful and cautions in approaching different sources.
3. Financial analysis and interpretation:
The analysis and interpretation of financial statement is an important task of a

financial manager. He is expected to know about the profitability, liquidity position,
short-term and long-term financial position of the concern.
4. Cost volume profit analysis:
This is popularly known as “CVP relationship”. For this purpose, fixed costs, variable
costs and semi-variable costs have to be analyzed. The financial manager has to
ensure that income of the firm will cover its variable costs, for there is no point in
being in business, if this is not accomplished.
5. Capital budgeting:
Capital budgeting is the process of making investment decisions in capital

expenditure. It is an expenditure the benefits of which are expected to be received
over a period of time exceeding one year.
6. Working capital management:
Working capital refers to that part of firm’s capital which is required for financing the
short-term or current assets such as each, receivables and inventories.

FINANCIAL STATEMENT
Financial statements are summaries of monetary data about an enterprise. It

includes audited profit and loss account and balance sheet along with different
schedules, director’s report, auditor’s report and other statement of facts and figures
which offer the state of financial affairs of a firm.
COMPONENTS OF FINANCIAL STATEMENT
A complete set of financial statements normally comprises:
a. Balance sheet
b. Statement of profit and loss
c. Cash flow
Notes on accounts and accounting policies and other statement and explanations
including information based on or derived from and to be read with financial
statements, for e. g segment performance, related party transactions and managerial
remuneration.
PURPOSE OF FINANCIAL STATEMENTS
There are three main purposes of financial statements:
1. To report on the financial position of a business enterprise.

2. To show how the entity has performed financially over an accounting period.
3. The most common measurement of performance is “profit”.
FINANCIAL ANALYSIS
Financial statement analysis is the process of interpretation of financial

information contained in financial statement. Different figures reflected in the
financial statement are correlated with one another and the apparently hidden
meaning of each figure of affirms. Financial statement analysis is a process of
scanning of financial statement to judge profitability, solvency, stability, growth and
prosperity of a firm.

OBJECTIVES OF FINANCIAL STATEMENT
 The adequacy or otherwise of the profits earned by the company.

 The adequacy or otherwise of financial strength.
 The ability to generate enough cash and cash equivalents and the timing and
certainly of their generation.
 The future growth prospects of the company.
TOOLS AND TECHNIQUES OF FINANCIAL ANALYSIS
The analysis and interpretation of financial statement is used to determine the

financial position and operations as well. A number of techniques are used to study
the relationship between different statements. The following are some tools of
financial analysis:
 Comparative statement
 Common-size statement
 Fund floe statement
 Cash flow statement
 Trend analysis
 Ratio analysis
 Cost- volume profit analysis
COMPARATIVE STATEMENT:
The comparative financial statement is statement of the financial position at

different periods of time. The elements of financial position are shown in a
comparative form so as to give an idea of financial position at two or more periods.
Thus, in these statements, figures for two or more periods are placed side by side to
facilities easy comparison. Both the income statement and balance sheet can be
prepared in the form of comparative financial statements.

COMMON SIZE STATEMENT:
Common size financial statements are those in which figures reported are
converted into percentage to some common base. When this method is pursued, the
income statement exhibits each expenses item or group of expense items as a
percentage of net sales and net sales are taken at 100% similarly, each individual
asset and liability classification is shown as a percentage of total assets and liability
respectively. Statements prepared in this way are referred to as common size
statements. Common size statements prepared one firm over the years would
highlight relative changes in each group of expenses, assets and liability.
TREND ANALYSIS:
Trend percentages are very much helpful in making a comparative study of

the financial statements for several years. The way calculating trend percentages
involves the calculation of percentages relationship that each item bears to the same
item in base year. Each item of base year is taken as 100 and on that basis the
percentages for each of the years are calculated, these percentages can be taken as
index number showing the relative changes in the financial data resulting with the
passage of time this method is a very much useful, analysis devise for the
management since by substitution of percentage for large amounts brevity and
readability are achieved.
FUND FLOW STATEMENT:
Fund flow statement is a financial statement describes the source from which
additional funds were derived and the uses to which these funds were put.
The fund flow statement is called by different names, such as, statement of sources
and application of funds, statement of changes in working capital.

CASH FLOW STATEMENT:
Cash flow statement shows the movement of cash their causes during the
period under consideration. It may be prepared annually, half yearly, monthly,
weekly, or for any other duration. Cash flow is prepared to show the impact of
financial policies and procedures on the cash position of the firm and takes into
consideration of all transactions that have a direct impact upon cash.
COST-VOLUME PROFIT ANALYSIS:
Cost-volume profit analysis is a technique for studying the relationship

between cost, volume and profit. Profit of an undertaking depends upon a large
number of factors. But the most important of these factors are the cost of
manufacture, volume of sales and the selling price of the products. In cost-volume
profit analysis an attempt is made to analyze the relationship between variations in
cost with variations in volume.

ABOUT THE TOPIC:
ASSETS AND LIABILITIES MANAGEMENT:
Assets and liabilities management is otherwise referred to as balance sheet

management is concerned with measuring, monitoring and managing of all market
risks such as interest rate risk, liquidity risk and credit risk etc. It involves the
planning, directing and controlling flow, level, mixed costs and yield of the
consolidate funds if the institution.
Many projects involves through study of assets liability management concepts, the
purpose of asset liability, RBI guidelines issued with respective asset liability
management alternative approach available for managing the risk, after a thorough
study of the concept implementation of asset liability management steps in the
essential requirements of implementation.
The basis for financial planning analysis and decision making is the financial
information. Financial information is needed to predict, compare and evaluate firm’s
earning ability. It is also required aid in economic decision making investment and
financing decision making. The financial information of an enterprise is contained in
the financial statement or accounting reports.
Balance sheet is the most significant financial statement. It indicates the

financial condition or the state of affairs of the business at a particular moment of
time. More specifically, balance sheet contains the information about resource and
obligation of a business entity and its owner’s interest in the business at a particular
point of time. Thus the balance sheet prepared on 31 st March ever year reveals the
firm’s financial position on the specified date. In the language of accounting balance
sheet communicates about assets, liabilities and owner’s equity.
A technique companies employ in coordinating the management of assets and

liabilities so that an adequate return may be earned, also known as “surplus
management”.

ASSETS:
Assets is derived from the French word “asses” which means enough, so literally
assets means enough or sufficient economic resource owned by a business concern
for carrying on the business. According to Finney and Miller, Assets are future
economic benefits, the rights which are owned or controlled by an organization or
individual.
Assets may be described as valuable by business which was acquired at a measurable

money cost. As an economic resource, they satisfy these requirements. In the first
place, the resource must be available. A resource is valuable if
1. It is cash/convertible into cash

2. It can provide future benefits to the operation of the firm. Secondly, the
resource must be owned. Mere possession or control of resource would not
constitute an asset.
3. It must be acquired at a measurable money cost. In case when an asset is not
acquired for cash/promise to pay cash, the test is would have cost had cash
been paid for it.
ASSETS HAVE THREE ESSENTIAL CHARACTERSTICS:
1. They embody a future benefit that involves a capacity, single or in

combination with other indirectly to future net cash flows, and in the case
of not-profit organization, to provide services.
2. The entity can control the access to the benefit
3. The transaction or event giving rise to the entity’s right to, or control of,
the benefit has already occurred.
The accounting equation relates assets, liabilities, and owner’s equity:
Assets = Liabilities+ Owner’s Equity

The assets in the balance sheet are listed either in order of liquidity
promptness with which they are expected to be converted into cash or in reserve
order, that is fixity or listing of the liquid(fixed) first followed by other categories,
that is, assets with similar characteristics are put in one category. The standard
classification of assets divides them into:
1) Fixed assets
2) Current assets
3) Investment
4) Other assets
FIXED ASSETS
As the name suggests, such are fixed assets in the sense that they are acquired
to be retained in the business on long term basis to produce goods and services and
are not for resale. They are in sense long term resource in that they are held for longer
than one accounting period. For this reason, they are known as long term assets. Such
are obviously of crucial significance as the future earnings/revenue/profits of the firm
are basically determined by them.
The fixed asset falls into the following categories:
A. Tangible
B. Intangible
TANGIBLE ASSETS
These assets are those which have physical existence and generate goods and
services, includes in this category are land, building, machinery, furniture and so on.
They are shown in the balance sheet, in accordance with the coat concept, at their cost
to the time they were purchased. Their cost is allocated to / charged against / spread
over their useful life. The yearly charge is referred to as depreciation. As a result, the
amount of such assets shown in the balance sheet every decline to the extent of
amount depreciation charged in that year.

INTANGIBLE ASSETS
The asset does not generate goods and services directly. In a way, they reflect
the rights if the firm. This category of asset comprises patents, copyrights, trademarks
and goodwill. They confer certain exclusive rights to their owners; patents confer an
exclusive right to use an invention; copyrights relates to production and sale of
literary, musical and artistic works; trademark represents the exclusive rights to use
names, symbols, labels designs, and so on. These are also written-off over a period of
time. They yearly charge is referred to as amortization.
CURRENT ASSETS
The second category of assets included in balance sheet is current assets. In

contrast to fixed assets, they are short term in nature. They refers to assets/ resources
which are either held in the form of cash or expected to be realized in cash within the
accounting period are the normal operating cycle of the business whichever us more.
The term “operating cycle” means the time span during which cash is converted into
cash. Conventionally, such assets are held for a short period of time, usually not more
than a year. These are also known as liquid assets. Current assets refer to cash and
temporarily held assets. It is also called as circulating, floating or fluctuating
assets.
Current assets include:
 Cash
 Marketable securities
 Accounting receivables (debtors) notes/ bills receivables
 Inventory
CASH
Cash is the liquid asset and includes cash in hand and cash at bank. It provides instant
liquidity and can be used meet obligations/ acquire assets without any delay.

MARKETABLE SECURITY
These are short investments which are both readily marketable and expected to be
converted into cash within a year. They provide an outlet to invest temporary
surplus/idle found/cash. According to generally accepted accounting principles,
marketable securities are shown at cost, the current market value is also shown is
parenthesis.
ACCOUNTS RECEIVABLES
These represents the amount that customer owe to the firm, arising from the sale of
goods on credit. They are shown in the balance sheet at the amount owned less an
allowance (provision for bad debts) for the portion which may not be collected.
INVENTRY
It means the aggregate of those items which are
Held for sale in the ordinary course of business(finished goods)
In the process of production for such sale (work in progress)
To be currently consumed in the production of goods and services (raw material)

available for sale. It is the liquid asset. Included in the production in inventory are
raw materials, work in progress (semi-finished) and finished goods. Each of these
serves a useful purpose in the process of production and sale. Inventory is reported in
the balance at the cost or market value whichever is low.
INVESTMENT
The third category of fixed asset is investment. They represent investment of funds in
the securities of another company. They are long-term outside the business of the
firm. The purpose of such investment is either to earn return or to control another
company. It is customarily shown in the balance sheet at costs with the market value
shown in parenthesis.

OTHER ASSETS
This includes in this category of assets is what is called deferred charges. That is,
advertisement expenditure, preliminary expenses, and so on. They are pre-payment
for service/benefits for period exceeding the accounting period.
LIQUID ASSETS
Liquid assets are those current assets which are either in the form of cash or which
can be converted into cash quickly without much loss.
WASTING ASSETS
Wasting assets are those which are exhausted or lost through use.
FICTICIOUS ASSETS
Fictitious assets are a mere debit balance that is unwritten off expenses and losses,
carried forward from one accounting year to another. These assets are fictitious or
real, as they are not represented by any tangible or concrete property.
LIABILITIES
The second major content of balance sheet is liabilities, defined as the claims of
outsiders against the firm. Alternatively, they represent the amount that the firm owes
to outsides. One source of fund is barrowing long term as well as short term. The
firms can borrow on a long term basis from financial institution/ banks or through
bonds/ mortgages/debentures, and so on.
These outside sources from which the company can borrow are termed as liabilities
since the finance the assets, they are, in a sense claim against the assets. The amount
shown against the liability item is on the basis of owned, not the amount payable.
Depending upon the periodicity of the funds, liabilities can be classified into:
1. Long term liabilities

2. Short term liabilities

LONG TERM LIABILITIES
The liabilities represent the obligation of the firm payable after the accounting period.
The sources of long term barrowings are
a. Debentures
b. Bonds
c. Mortgages
d. Secured loans
e. Loans from financial institutions and commercial banks.
They have to be repaid/ redeemed either in lump sum at the maturity of the loan/
debenture or in installments over the life of the loan. Long term liabilities are shown
in the balance sheet net of redeemed/ repayment.
SHARE CAPITAL (OWNER’S EQUITY)
The third major content of the balance sheet is the owner’s equity /conceptually, it
refers to the claims of the owners of the business against the assets of the firm.
Alternatively, owner’s equity may be viewed as a part of the resources of firm which
are supplied by its owners. The owners of a business are known as shareholders are
entitled to a stated amount of dividend and return of principal at maturity. They are
kin to creditors (liabilities of the firm)
The ordinary stakeholders, are also as equity holder, are different from the
performance stakeholders as creditors. They are entitled to the income /assets of the
firm remaining after claim of the creditors/preferences are met in full. Their claim
against the assets of the firm is thus residual. This is also known as the equity of the
owners.

The owner’s equity may be said to consist of two elements:
 Paid up capital, that is, the initial amount of funds contributed by the
stakeholders.
 Retained earnings/reserves and surplus, that is, the part of the profit belonging
to the shareholders which is not paid to them as dividends but instead is
retained back in the business
CURRENT LIABILITIES
In contrast, to the long term liabilities, such liabilities are obligations to outsiders
intended to be repayable in a short period, usually, with in the accounting period or
the operating cycle of the firm. It can be counterpart of the current assets
.Conventionally, they are paid of the current assets; in some cases, however, existing
current liabilities can be liquidated through the creation of the additional current
liabilities.
Current liabilities are as follows
 Account payable
 Bill/notes payable
 Tax payable
 Accrued expenses
 Deferred income
 Short term bank credit
TRADE CREDIT
This represents the claims of such outsiders as have sold goods to firm on credit for a
short period depending upon trade practices. Usually, such credit is unsecured. One
form of the short term credit is that the buyer-firm will pay the amount after a lapse of
time but there is no formal written agreement. This is known as accounts payable.

When the claims of the supplier of the goods/services are evidenced by a note/bill
written acknowledgment of debt called bill/note payable. A bill/ note are promises in
writing pay a certain sum of money at some specific date. Another source of short
term funds is short term bank credit in the form of overdraft, cash, credit, loan and
advances.
TAX PAYABLE
It refers to the amount to be paid to the government as taxes. Accrued expenses

represent certain obligations which are claim against assets but there is no
documentary evidence. Examples of this type current liability are outstanding wages,
salaries, rent, commission and so on.
DIFFERED INCOME
This represents the liability that arises out of receipt of income in advance, which is
received in advance.
BALANCE SHEET
The statement of assets and liabilities prepared on the last date of the trading period is
known as the “Balance sheet”. Balance sheet is a list of assets and liabilities of a
business.
According to J. R Batliboi, “A balance sheet is a statement prepared with a view

to measure the financial position of a business on a particular date.
OBJECTIVES OF BALANCE SHEET
The balance sheet is prepared with the objective of ascertaining the financial position
or soundness of a business as in particular date. The excess of assets over liabilities is
termed as “capital”. The excess of liabilities over assets is termed as “Deficiency of
capital”.

ADVANTAGES OF BALANCE SHEET
 Balance sheet helps in ascertaining the financial position of a concern as on a

particular date.
 Balance sheet helps in knowing the value of various assets at a glance.
 Balance sheet helps knowing the amounts of various liabilities at a glance.
 Balance sheet helps in ascertaining the owners capital as on any particular
date.
 Balance sheet is helpful for the preparation if fund flow statement, which
throws light on the source from which funds have raised and where they have
been applied.
 Balance sheet is helpful for the ascertaining of funds operations, which
indicates the operational efficiency of the firm.
 Balance sheet helpful for the calculation of working capital
 Balance sheet is useful for the calculation of financial ratios, short term as
well as long term.
 Balance sheet is helpful to know the capital employed.

LIST OF CURRENT ASSETS AND CURRENT LIABILITIES
CURRENT LIABILITIES CURRENT ASSETS
1.Bills payable 1.Cash in hand
2.Sundry creditors 2.Cash at bank
3.Outstanding expenses 3.Bills receivable
4.Dividends payable 4.Sundry debtors
5.Bank over draft 5S.Short term loans given
6.Short term loans bought 6.Marketable investment
7.Proposed dividend 7.Prepaid expenses
LIST OF NON CURRENT LIABILITIES AND ASSETS
NO- CURRENT LIABILITIES NON-CURRENT ASSETS

Share capital Fixed assets
 Equity share capital  Goodwill

 Preference share capital  Land
 Redeemable preference share  Building plant and machinery
capital  Furniture and fitting
 Share forfeited account  Trademarks, patents and
copyrights
RESERVES AND SURPLUS INVESTMENT
 General reserves  Investment on share and

 Reserve capital debenture
 Capital reserve
 Share premium account  Investment on government
 Capital redemption reserve securities
 Profit and loss account
SECURED LOANS MISCELLANEOUS EXOEDITUER
 Debentures  Discount on issue of shares

UNSURED LOANS PROFIT AND LOSS ACCOUNT
 Public deposits  Deficit (debit balance)
Current liabilities and provisions
TITLE:
“A STUDY ON ASSETS AND LIABILITIES

MANAGEMENT WITH SPECIAL REFRENCE TO UMA
INDUSTRIES”

STATEMENT OF PROBLEM:
The basic financial statements, that is, the balance sheet and profit and loss
account or income statement of the business reveals the net effect of various
transactions on the operational and financial position of the company.
The balance sheet gives view of the resources of a business and the uses to which
these resources have put at certain point of time. It does not disclose the cause for
changes in the assets and liabilities between two different points of time. The profit
and loss account in a general way indicates the resources provided by operations. But
there are many transactions that take place in all undertakings which do not operate
through profit and loss account. For an organization, a movement of funds that is in
flow and out flow of funds is inevitable. The management has to exercise control on
movement of funds. Therefore, there is a need for studying the movement of funds in
the organization.
Assets and liabilities management is important activity of any financial

institution. Any company which will manage its resources properly can reach the
higher stages of growth and it will be helpful to improve the financial position of the
company. So here the attempt is made to analyze the financial position of the
company through “STUDY ON ASSETS AND LIABILITIES
MANAGAMENT” analysis with special reference to Uma industries.
OBJECTIVES OF THE STUDY:
The main objectives of the study are as follows:
 To analyze the financial position of the company through comparative balance

sheet, statistical tools and techniques.

 To study the existing system of assets and liabilities management

 To provide reliable financial information about economic resources and
obligation of the business firm.
 To give suggestions to improve the profitability, liquidity position and
solvency position.
 To study the operational efficiency of the company.
SCOPE OF THE STUDY:
 The study is conducted at Uma industries.

 The study covers all the components of assets and liabilities.
 The study of assets and liabilities is limited to the single organization and
there no comparison with another company.
 The study covers a period of four financial years financial statements.
 The various suggestions are made here are applicable to this organization
only.
LIMITATIONS OF THE STUDY:
 The study is conducted only on the basis of data provided by the company.
 Only few methods are used in analyzing the data.
 This study is confined only to Uma industries.
 In depth study is not possible due to lack of time.
 The findings and suggestions may be applicable at the period of the study
only.
STUDY METHODOLOGY:
The data collection is one of the important aspects in the research design
purely because, it is the way that how we can answer to research questions.

The essential purpose of the research methodology is to provide the information that
will facilitate the identification of the problem and also assist the organization on
carrying out best possible decisions.
DATA COLLECTION:
For the purpose of this project both primary and secondary data is used.
 PRIMARY DATA:
Primary data is mainly collected from finance and H R personnel with the help of the
other departments of the company. Primary data are collected through:
 Personal interaction with the general manager of finance.

 Face to face interaction.
 Direct observation.
 SECONDARY DATA:
The secondary data is collected through
 Internal sources:
Profiles, Books of accounts, Balance sheet, Reports and documents.
 External sources:
Websites, News papers and Magazines.
PLAN OF ANALYSIS
The collected data is analyzed to arrive at the inference or to draw the

conclusions. The analysis is done by plotting the collected data in the graphs. Here,

all the calculations are done with the help of M S Excel software package. Later the
inferences are arrived at the help of these graphs and tables which are easy to
understand and interpret.
HISTORY OF THE COMPANY:
UMA INDUSTRIES AN ISO 9001: 2008 COMPANY

UMA INDUSTRIES, started by a committed technocrat, Mr. Sharanu Patil, in

rented shed at KSSIDC Estate building of size around 600 sq. ft. with 3 power presses
powered by 10 HP supply at Veerasndra industrial Estate in the year 2006.
A sound knowledge is gathered in Product type, Present Market scenario for press
components, Customer quality requirements, Available customers, Man power
requirement etc, Before the start up of the production.
This industry is started with the following capacities.
1. Mr. Sharanu Patil.
A technocrat, graduated in Mechanical Engineer started, his career in the year of

1991 with Karnataka Dials ltd. As a production supervisor trainee. He has worked
in this organization till May 1993.In this organization he has gained the knowledge in
Press shop activities and Screen printing activities. Then he has joined M/s
Mannesmann VDO India Ltd. In this organization he has worked around 3 years in
Maintenance and around 4 years in production (Press Shop).In span of 7 years he
has gained knowledge in Press maintenance ,Press tool maintenance ,Press tool
setting and handled 40 different types of automotive pressed components.
He has worked with M/s Toyota group, TVS group Industries. He has visited
M/s Sayi Machine tools Taiwan when he was working with M/s Omax Auto ltd.
M/s Sayi Machine tools Taiwan is the company who Manufacture power presses of
cap 25 T to 2500 T.

2.Subrat Das:
He is an Diploma Mechanical Engineer having 7 years of experience in different

organization like M/s Omax autos ltd and M/s. Jay ushin ltd(MNC).He is practical
oriented person and having knowledge in Quality and Production field.He is expose
to System work like ISO &TS 16949 documentation etc.
3. Shreekant.B:
He is an Diploma Mechanical Engineer He is press shop supervisor of uma

industries. He is having 5 Years Experience in Press shop operation and tool
maintenance. He was worked in Suveswaru Enterprises pvt. Ltd. Bangalore. And
also company is having experience Quality Department in press shop.
4. Bharathi.S.Patil:
She is B Com and MA Graduate and having wide Experience in Accounts,

Administration and stores activities. She is handling Accounts, Administration and
Stores activities. She is the MR for M/s Uma Industries.
The company started the Industry with only one customer i.e. M/s Polyflex
Engineering Pvt. Ltd. Around 4 months the company made only Labor business with
M/s Polyflex Engineering Pvt. Ltd.In span of one year Uma industries gathered the
business from different corners that is with our quality level, on time delivery at low
cost and customer satisfaction through their regular interaction for quality problem
and delivery problem.
They found that present facilities are insufficient to fulfill customer

requirements. They have shifted to new location at Veerasandra Industrial estate with
4 new presses, 2000 SFT shop floor area and 40 HP connected power. Than in span
of 3 years company gathered good customers by committing to fulfill their needs.

In 2009 the company have purchased KSSIDC Industrial plot around 7000 SFT at
Jigani Industrial Area. In 2010 they built 5000 sft industrial building at jigani in
their own industrial plot.
VISION OF THE COMPANY
• Uma industries is intends to be among the top manufacturer of press component in

india.
• Satisfying the needs of the customers and supplies.
•
MISSION OF THE COMPANY
• To continuously innovate and develop products and services to meet the needs of
security.
STRENGTHS OF THE COMPANY
a) Own Industrial Land - 7000 SFT at Jigani Indl. Area
b) Built up Area - 5000 SFT
c) Good consumers
d) Reliable raw material suppliers
When the company is shifted their facility to the new location at Jigani
Industrial area, they made the survey of industries and found that there was a
requirements of Heat Treatment facilities and metal finishing equipments.
The company started the Heat Treatment project in November 2011 and operation has
been started may 2012 with following facilities.

LIST OF MACHINERYS:
1. Pit Furnaces of capacity 800kgs (66KW) - 3 nos

2. Tempering Furnace of capacity (40KW) - 1 no
3. Quenching Tank (Oil) of capacity 10000ltrs - 1no
4. Washing Machine - 1no
5. Tumbling type Shot Blasting Machine - 1no
6. Barreling (Vibro) Machine capacity 300ltrs - 1no
LAB EQUIPMENTS:
1. Brinel Hardness Tester (3000kgs) - 1no

2. Rockwell Hardness Tester - 1no
3. Micro scope - 1no
4. Abrasive Cutting Machine - 1no
5. Molding Machine - 1no
6. Polishing Machine ( Double Disk) - 1no
7. Brinel Micro Scope - 1no
With 300 KVA, KPTCL power and 300KVA DG set (Back up Power) We have total
set up in one roof that includes Sheet Metal / Machinery components manufacturing
Heat Treatment Process, Shot Blasting Process, Linishing and Barreling operation.
LIST OF VALUABLE CUSTOMERS
1. M/s. IFB Industries ltd

2. M/s IFB Automotive
3. M/s. Micro Plastics
4. M/s. Indo Autotech Ltd
5. M/s. Gearock forge Pvt. Ltd.
6. M/s. Suprajith Engg Ltd
7. Maryland Mechanical (I) Pvt Ltd

PRODUCT RANGE
We produced the component in CRCA, HR PO, HR Plain and SS 304 material

from 0.5 mm to
5.00 mm.
We produced Deep draw components till 165 mm
Our product mainly goes to automotive industries, Elect equipments and Defense
PRODUCTION PROCESS
 Input of raw materials

All the raw materials needed for manufacturing the components are received
and stored in the raw material yard. The types of raw materials needed are
placed for different components differently.
 Machining
Machining is a collection of material-working processes in which power-
driven machine tools, such as saws, lathes, milling machines, and drill presses,
are used with a sharp cutting tool to mechanically cut the material to achieve
the desired geometry. Machining is a part of the manufacture of almost all
metal products, and it is common for other materials, such as wood and
plastic, to be machined.
 Heat treatment
Heat treatment is a group of metalworking processes used to alter
the physical, and sometimes chemical, properties of a material. The most
common application is metallurgical.

Heat treatments are also used in the manufacture of many other materials, the
most common method is metallurgical. There is a gas plant that has been set
up from which there is a gas pipeline to various furnaces which helps in heat
treatment. The heat treatment plant has heat treat furnaces which are all set at
the same temperature during heat treatment.
 Shot blasting
Shot blasting is the operation of cleaning or preparing a surface by forcibly
propelling a stream of abrasive material against it. Usually explained as the
use of a material against another material to make it smoother, remove surface
contaminants or to roughen a surface.
 After the above processes the components are then sent to the storage room.
 Once sent to the storage room they are then visually inspected.
 After the visual inspection they are packed accordingly and then dispatched.
 There is also a diesel storage area from where the diesel that is need for the
running of the different machines are received.

ORGNISATION STRUCTURE
SHARANU PATIL
PROPREITOR AND TECHNICAL
BHARATHI S.PATIL SUBRAT DAS SHREEKANT.B
ADMIN & A/C QUALITY PRODUCTION

INCHARGE INCHARGE INCHARGE
STORES PROCESS
TOOL TOOL
INCHARGE QUALITYN
SETTERS MAKER
ENGINEER
3 TEAM 3 TEAM 65 TEAM

MEMBERS MEMBERS MEMBERS

PRESENT MACHINERY DETAILS
List of Machinery
UMA
Machinery Capacity Qty Date of
Sl.N
Machin Name Purpose Installa
o
e No tion
Sheet Metal
1 PP1 Power Press 20 Ton 5 2010
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
6 PP6 Power press 30 Ton 3 1996
Parts Manf.
Sheet Metal
7 PP7 Power press 30 Ton 2 2011
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.

Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
Sheet Metal
Parts Manf.
16 Power Sheet Metal
PP16 200 Ton 1 2016
Press(Pneumatic) Parts Manf.
Power Sheet Metal
17 PP 17 150 Ton 1 2016
Power Sheet Metal
18 PP18 100 Ton 1 2016
Power Sheet Metal
19 PP19 75 Ton 1 2016
Power Sheet Metal

20 PP20 50 Ton 1 2016
Sheet Metal
21 PP 21 Hydraulic Press 50 Ton 1 2016
Parts Manf.
22 DM1 Drilling Machine 12MM 2 Drilling 2001
23 DM2 Drilling Machine 25MM 2 Drilling 2008
24 DM3 Taping machine M10 1 tapping 2014
Projection Projection
25 PRJ1 15 KVA 2 2013
welding m/c welding
26 PRJ2 12 KVA 2 2011
welding m/c welding
27 PRJ 3 75 KVA 1 2012
welding m/c welding
28 PRJ 4 30 KVA 2 2016
welding m/c welding
29 VB 1 Vibro Machine 300 ltrs 1 Barreling 2011
30 DG Diesel Gen set 100 KVA 1 Power use 2013
Screw Air
31 CMP 200 CFM 1 Air Pressure 2012
Compressor
MIG WELDING MIG
32 MWM 1 (50-300A) 2 2013
MACHINE WELDING
33 MWM 2 MIG WELDING (50-300A) 8 MIG 2015-

MACHINE WELDING 16
TOOL ROOM FACILITIES
Press Tool
01 SF1 Sur Grinding Mc Blohm 2012
Manf
EDM Wire Press Tool
02 WC Sodic 2010
Cutting Machine Manf
Press Tool
03 DRO DRO Milling 2010
Manf
QUALITY SYSTEM
The company is Certified for ISO 9001:2008 standards by BSCIC Certifications
Pvt. Ltd. Apart from this Since Mr. Sharanu Patil was worked with many MNC
companies, he is aware of QS 9000, ISO 9001,TS 16949 and ISO 14000 systems.
Same systems company is trying to implement in their industry step by step.

They prepared the schedule to upgrade their quality system to TS16949 by end of
Nov. 2014
COMPANY OTHER DETAILS
Company Registration no Under SSI : 290201101616
TIN No: 29960787609
Excise Registration: ADQPP5587NEM002
Bankers: Canara Bank (SSI Unit Bommasandra)
PAN : ADQPP5587N
CONTACT DETAIL
M/s UMA INDUSTRIES – UNIT 1
# SPL-12 KSSIDC INDUSTRIAL AREA,

2ND PHASE JIGANI, ANEKAL -TALUK
BANGALORE – 562 105
M/s UMA INDUSTRIES - UNIT 2
BOMMASANDRA INDL AREA PHASE 4
BANGALORE -560 099
Contact persons
1. Mr. Sharanu Patil. 2. Mrs.Bharathi S.Patil 3. Balaji Rao
4. Subrat Das 5. Shreekant.B
COMPANY WEBSITE
WEBSITE ADRESS : www.umaindustriesbangalore.com (not working due to sever

problem)
Email address: [email protected]
PRODUCTS OF UMA INDUSTRIES
BACK PLATE BACK PLATE

BACK PLATE

LIFTING PLATE EARTH CLIP SNUBBER ASSY
E LE
C T .S
W I TC
H
S EA
T I N
G
EXMINE STOVE
COMPONENTS COMPONENTS
U & ANTENNA CLAMP CLUTCH PLATE

K12 TONGUE
0130 LOWER PART STAY B BATTERY TRAY STAY RRR
FENDER

STAY LUGGAGE BRKT RR KUSHION STAY R UNDER
BOX COVER
STAY A RR FENDER STAY L STEP BAR STAY R STEP BAR
BRKT CUSHION STAY BATT BOX STAY MAIN SW
SHOP FLOOR ACTIVITY

REGISTRATION CERTIFICATE OF THE COMPANY

COMPARITIVE BALANCE SHEET

To analyze the data of the company the tools used is comparative balance sheet, some
of the statistical tool such as tables and graphs. The required information for the study
is taken annual reports of the company. The various assets and liabilities of the year
2012-13, 2013-14, 2014-15, 2015-16, 2016-17 are compared with the assets and
liabilities of the balance sheet is prepared on a particular date reveals the financial
position of the concern on that date. It does not reveals the trend in the business over
a position of year. To study the trend in the business over a periods at 2 or 4 years a
comparative balance sheet is to be prepared. Compared balance sheet as on 2 or more
different dates can be used for comparing assets and liabilities and finding out any
increase or decrease in those items.

A comparative study of balance sheet will reveals the cause for changes in the
financial position on the account of the numerous business translation that took place
between two periods of tie in the business. The comparative study of balance sheet
throws light on financial policies adopted by the management during the relavant
accounting period. As the income statement presents the review of the operating
activities of the business, the comparative balance sheet shows the effects of
operation, on assets and liabilities.
The comparative balance sheet consists of two columns for the original data. A
third column is used to show increase or decrease in various items. A fourth column
containing the percentage of increase and decrease may be added.
METHODOLOGY FOR ANALYSING OF THE BALANCE SHEET
The following methodology has been adopted for the analysis of the balance sheet.
 In the first step change in absolute figure that is, increase or decrease should
be calculated.
 In the second step percentage of change should be calculated by using the
following formula:
Percentage of change = change in amount \base year amount *100
 After calculation of percentage of changes, interpretation should be made.
GUIDELINES FOR INTERPRETATION OF BALANCE SHEET
The following guidelines help the analyst interpretation of balance sheet:

The short term financial position can be compared with the working capital of
both the year. If there is any increase in working capital it should be
understood that is an improvement in current financial position of the position,
business concern.
To study the liquidity position, changes in liquid assets such as cash in hand,
cash at bank, bills receivables, and sundry dedtors must be ascertained. If
there is any increase in liquid assets it should be understood that there is an
improvement liquidity position of concern and vice-versa.

A high increase in sundry debtors and bills receivables means an increase in

risk in collecting the amount of dues.
A high increase in closing stock may mean that decrease in the demand.
The long term financial position of a business concern can be analyzed by
studying the changes in fixed assets, long term liabilities and capital.
Fixed assets must be compared with long term loans and capital. If the
increase in fixed assets in more than the increase in long term finances then a
part of fixed assets has been financed from the working capital, which is not
good.
If the increase in the long term finances is more than the increase in fixed
assets, it means of long term finances are made available for the working
capital, which is wise policy.
If there is an increase in profits and loss account\reserve balance, it means that
there is an increase in profitability of the concern. The decrease in profit and
loss account\ reserve means payment of dividends, capitalization of profits by
the issue of bonus shares.
TABLE-4.1
TABLE SHOWING THE COMPARATIVE VALUE OF

PROPRIETOR CURRENT A\C
VALUE OF INCREASE \
PROPRIETOR DECREASE INCREASE \
CURRENT A\C
YEARS (RS) DECREASE (%)
3736494-3736494 0 0%

2013-2014
2014-2015 11180864-3736494 7444370 199.23%
2015-2016 14118626-11180864 2937762 26.27%
2016-2017 6703121-14118626 -7415505 -52.52%
ANALYSIS:
The above table shows value of proprietor current a\c of the company during the
period of 2013 to 2017. In the year of 2014-15 the proprietor current a\c was having
high value compared to rest of the years. In the year 2016-17 we can see the negative
value of proprietor current a\c comparatively.
GRAPH-4.1
THE GRAPH SHOWING COMPARATIVE VALUE OF

PROPRIETOR CURRENT A\C

Proprietor Current A\C

250%
199.23%
200%
Increase \Dcrease (%)
150%
100%
50% 26.27%
0.00%
0%
2013-2014 2014-2015 2015-2016 2016-2017
-50%
-52.52%
-100%
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of proprietor current a\c of
the company for the period 2013 to 2017. In the year 2016-2017 the proprietor
current a\c is showing the negative value because the company has used more
drawings and interest on drawings is also more.
TABLE-4.2
TABLE SHOWING COMPARATIVE VALUE OF SHARANU

PATIL A\C

VALUES OF INCREASE \
SHARANU PATIL DECREASE INCREASE \
YEARS A\C (RS) DECREASE (%)
2013-2014 4040978-3090883 950095 30.73%
2014-2015 4112014-4040978 71036 1.75%
2015-2016 4112014-4112014 0 0%
2016-2017 15000000-4112014 10887986 264.78%
ANALYSIS:
From the above table it can be analyzed that the value of Sharanu patil a\c has been
increased in the year 2016-2017 when compared to rest of the 3 years. In the year
2015-2016 Sharanu patil’s a\c remain same as in the year 2014-2015 and there is no
increase or decrease in the value.
GRAPH-4.2
GRAPH SHOWING THE COMPARATIVE VALUE OF

SHARANU PATIL A\C

Sharanu Patil A\C

300.00%
264.78%
250.00%
Increase\ decrease (%)
200.00%
150.00%
100.00%
50.00% 30.73%
1.75% 0.00%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of Sharanu patil a\c for the
period 2013 to 2017. In the year 2016-2017 the value has increased because Shranu
patil has invested more capital in the company when compared to rest of the 3 years.
TABLE-4.3
THE TABLE SHOWING COMPARATIVE VALUE OF NET

PROFIT

INCREASE \
VALUES OF NET DECREASE INCREASE \
YEARS PROFIT (RS) DECREASE (%)
2013-2014 661823-1272100 -610277 -47.97%
2014-2015 1015341-661823 353518 53.41%
2015-2016 1510634-1015341 495293 48.78%
2016-2017 1702365-1510634 191731 12.69%
ANALYSIS:
The above table shows that net profit of the company for the period 2013 to
2017.Where the company is having the negative value in the year 2013-2014. In the
year net profit is increased. Later on the net profit of the company is decreasing from
one year to another year.
GRAPH-4.3
THE GRAPH SHOWING THE COMPARATIVE VALUE OF NET

PROFIT

Net Profit
60.00% 53.41%
48.78%
Increase \ decrease (%) 40.00%
20.00% 12.69%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
-20.00%
-40.00%
-47.97%
-60.00%
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of net profit of the company
is having the fluctuations. In the years 2014-2015, 2015-2016, 2016-2017 net profit
of the company is having the positive increase. In the year 2013-2014 company is
having negative value because the company incurred loss or more expenses when
compared to rest of the years.
TABLE-4.4
THE TABLE SHOWING THE COMPARATIVE VALUE OF

DRAWINGS

INCREASE \
VALUES OF DECREASE INCREASE \
YEARS DRAWINGS (RS) DECREASE (%)
2013-2014 590788-322005 268783 83.47%
2014-2015 538636-590788 -52152 -8.82%
2015-2016 1038153-538636 499517 92.73%
2016-2017 234721-1038153 -803432 -77.39%
ANALYSIS:
The table shows the value of drawings of the company for the period 2013 to 2017. In
the year 2013-2014 the value of drawings is increased (83.47%). In the year 2014-
2015 it is showing the negative value. In the year 2015-2016 drawings again
increased. In the year 2016-2017 the drawings of the company is showing the
negative value.
GRAPH-4.4
THE GRAPH SHOWING THE COMPARATIVE VALUE OF

DRAWINGS

Drawings
150.00%
100.00% 92.73%
83.47%
Increase \Dcrease(%)
50.00%
0.00%
2013-2014 2014-2015
-8.82% 2015-2016 2016-2017
-50.00%
-77.39%
-100.00%
Years
INTERPRETATION:
The above graph shows that the value of drawings of the company for the period
2013 to 2017. In the year 2016-2017 drawings of the company is having negative
value because the company drawn more amount then their balance.
TABLE-4.5

LOANS AND LIABILITIES

LOANS AND DECREASE INCREASE \
YEARS LIABILITIES (RS) DECREASE (%)
2013-2014 5065995-2797720 2268275 81.07%
2014-2015 5725605-5965995 659610 13.02%
2015-2016 9673903-5725605 3948298 68.95%
2016-2017 5878158-9673903 -3795745 -39.23%
ANALYSIS:
The above table represents the value of loans and liabilities for the period of 2013 to
2017. In the year of 2013-2014 the value of loans and liabilities is more compared to
rest of the years. In the year 2016-2017 the company is having the negative value of
loans and liabilities. It has been decreased to -39.23% .
GRAPH-4.5

LOANS AND LIABILITIES

Loans and liability

100.00%
81.07%
80.00% 68.95%
60.00%
Increase \ Decrease(%)
40.00%
20.00% 13.02%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
-20.00%
-40.00%
-39.23%
-60.00%
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of loans and liabilities of the
company for the period 2013 to 2017. In the year of 2013-2014, 2014-2015, 2015-
2016 the company has paid more loans later in the year 2016-2017 the company has
taken less loans comparatively so it is showing the negative value.
TABLE-4.6

DUTIES AND TAXES

INCREASE \
VALUES OF DUTIES DECREASE INCREASE \
YEARS AND TAXES (RS) DECREASE (%)
2013-2014 76609-115440 -38831 -33.63%
2014-2015 256127-76609 179518 243.38%
2015-2016 987764-256127 731637 285.65%
2016-2017 674875-987764 -312889 -31.67%
ANALYSIS:
From the above table it can be analyzed the value of the duties and taxes for the
period of 2013 to 2017. In the year of 2013-2014, 2016-2017 the company is having
the negative value of duties and taxes. We can see increase in value of duties and
taxes in the year 2014-2015, 2015-2016.
GRAPH-4.6

DUTIES AND TAXES

Duties and taxes

350.00%
300.00% 285.65%
250.00% 243.38%
Increase \ Decrease(%)
200.00%
150.00%
100.00%
50.00%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
-50.00% -33.63% -31.67%
Years
INTERPRETATION:
The above graph shows the value of duties and taxes of the company. In the year
2014-2015, 2015-2016 the company has paid more duties and taxes has it is showing
the increase value. In the year 2013-2014, 2016-2017 value of duties and taxes is
having the negative value because the company has taken some steps to reduce their
tax payment burden.
TABLE-4.7

SUNDRY CREDITORS

SUNDRY DECREASE INCREASE \
YEARS CREDITORS (RS) DECREASE (%)
2013-2014 3519147-2185370 1333777 61.03%
2014-2015 6927124-3519147 3402577 96.68%
2015-2016 12680490-6927124 5758766 83.19%
2016-2017 14406187-12680490 1725697 13.60%
ANALYSIS:
From the above table it can be analyzed that the sundry creditors of the company. In
the year 2014-2015 there is increase in percentage of sundry creditors. In the year
2016-2017 the sundry creditors percentage is decreased to 13.60%.
GRAPH-4.7

SUNDRY CREDITORS

Sundry creditors
120.00%
100.00% 96.68%
83.19%
Increase \Decrease(%)
80.00%
61.03%
60.00%
40.00%
20.00% 13.60%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
Years
INTERPRETATION:
In the year 2014-2015 the sundry creditor is increased up to 96.68%. It shows the
company didn’t had proper working capital in that year so only that company
purchased materials on credit basis and later the company taken some steps to
maintain proper working capital so the company decreased in the value of sundry
creditors. It shows that the company is giving lot of concentration to maintain proper
liquidity position in the company.
TABLE-4.8

OTHER CURRENT LIABILITIES

VALUES OF OTHER INCREASE \

CURRENT DECREASE INCREASE \
YEARS LIABILITIES (RS) DECREASE (%)
2013-2014 0-0 0 0%
2014-2015 0-0 0 0%
2015-2016 488690-0 488690 0%
2016-2017 191665-488690 -297025 -60.77%
ANALYSIS:
The above table shows the value of other current liabilities of the company from the
period 2013-2017. The company is showing zero balance of other current liabilities
from 2013-14, 2014-2015. In the year 2016-2017 the company is having the negative
value of other current liabilities.
GRAPH-4.8

OTHER CURRENT LIABILITIES

Other current liabilities

0% 0% 0%
0%
2013-2014 2014-2015 2015-2016 2016-2017
-10%
Increase\Decrease(%)
-20%
-30%
-40%
-50%
-60%
-61%
-70%
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of other current liabilities of
the company for the period 2013 to 2017. Other current liabilities of the company is
showing the nil and negative sing which means the company has the ability to pay its
current liabilities.
TABLE-4.9

FIXED ASSETS

INCREASE \ INCREASE \
VALUES OF FIXED DECREASE DECREASE
YEARS ASSETS (RS) (%)
2013-2014 12596311-8855663 3740648 42.24%
2014-2015 19774533-12596311 7178255 56.98%
2015-2016 24418315-19774533 4643782 23.48%
2016-2017 28977958-24418315 4559643 18.67%
ANALYSIS:
The above table it can be analyzed that the value of fixed assets of the company for
the period 2013 to 2017. In the year 2014-2015 the company is having the high value
of fixed assets when compared to rest of the years. In the year 2015-2016 and 2016-
2017 value of fixed assets is decreasing.
GRAPH-4.9

FIXED ASSETS

Fixed assets
60.00% 56.98%
50.00%
Increase \Dcrease (%) 42.24%
40.00%
30.00%
23.48%
20.00% 18.67%
10.00%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
Years
INTERPRETATION:
The above graph helps to interpret the value of fixed assets for the period 2013 to
2017. The company has purchased more fixed assets in the year 2014-2015 and rest
of the years 2013-2014, 2015-2016, 2016-2017 company spent less amount to
purchase the fixed assets compared to 2014-2015
TABLE-4.10

CLOSING STOCK

INCREASE\ INCREASE\
VALUE OF DECREASE DECREASE
YEARS CLOSING STOCK (RS) (%)
2013-2014 1524123-811994 712129 87.70%
2014-2015 2037812-1524123 513689 33.70%
2015-2016 5021451-2037812 2983639 146.41%
2016-2017 5062614-5021451 41163 0.08%
ANALYSIS:
The above table shows the value of closing stock of the company for the period 2013
to 2017. In the year 2015-2016 the value of the closing stock of the company is
increased to 144.41% and in the year of 2016-2017 the value of closing stock of the
company decreased to 0.08% .
GRAPH-4.10

CLOSING STOCK

Closing stock
160.00%
146.41%
140.00%
120.00%
Increase \ Dcrease(%)
100.00% 87.70%
80.00%
60.00%
40.00% 33.70%
20.00%
0.08%
0.00%
2013-2014 2014-2015 2015-2016 2016-2017
Years
INTERPRETATION:
From the above graph it can be interpreted that in the year 2015-2016 the value of
closing stock of the company is increased it shows that the company fails to sell more
products. In the year 2016-2017 value of closing stock is decreased because the
company sold more products.
TABLE-4.11

SUNDRY DEBTORS

VALUES OF DECREASE DECREASE
YEARS SUNDRY DEBTORS (RS) (%)
2013-2014 1265526-2723676 -1458150 -53.53%
2014-2015 5609054-1265526 4343528 343.21%
2015-2016 11778139-5609054 -3830925 -68.29%
2016-2017 10039196-11778139 -1738943 -0.14%
ANALYSIS:
From the above table it can be analyzed value of sundry debtors for the period 2013
to 2017. The value of sundry debtors in the year 2014-2015 is increased 343.21%. In
the year 2013-2014, 2015-2016, 2016-2017 value of sundry debtors decreased. It is
showing negative value .
GRAPH-4.11

SUNDRY DEBTORS

Sundry debtors
400.00%
343.21%
350.00%
Increase \ Decrease (%) 300.00%
250.00%
200.00%
150.00%
100.00%
50.00%
0.00%
2013-2014 2014-2015 2015-2016 -0.14%
2016-2017
-50.00%
-53.53% -68.29%
-100.00%
Years
INTERPRETATION:
The value of sundry debtors is increased in the year 2014-2015 when compared to
rest of the years. It is because the company adapts sales maximization concept so that
the company sold goods on credit basis due to that the value of debtors is increased.
TABLE-4.12

LOANS AND ADVANCES

VALUES OF INCREASE \ INCREASE \

LOANS AND DECREASE DECREASE
YEARS ADVANCES (RS) (%)
2013-2014 955000-10000 855000 855%
2014-2015 885000-955000 -70000 -7.32%
2015-2016 985000-885000 100000 11.29%
2016-2017 0-985000 -985000 0%
ANALYSIS:
This table indicates that the loans and advances of the company for the period 2013 to
2017. In the year 2013-2014 the value of loans and advances is increased compared to
2015-2016 and in the year 2014-2015 & 2016-2017 the loans and advances value is
decreased.
GRAPH-4.12

LOANS AND ADVANCES

Loans and advances

1000%
855.00%
Increase \ Decrease (%) 800%
600%
400%
200%
11.29%
0%
2013-2014 -7.32%
2014-2015 2015-2016 2016-2017
-100.00%
-200%
Years
INTERPRETATION:
In the year 2013-2014 the loans and advances is more compare to other 3 years.
Nothing but the company improving its liquidity position through that the company is
trying to avoid to dependence on outside funds to meet day to day obligations so it is
positive sign to the company.
TABLE-4.13

CASH IN HAND

VALUES OF CASH DECREASE DECREASE
YEARS IN HAND (RS) (%)
2013-2014 31232-83428 -52196 -62.56%
2014-2015 52328-31232 21096 67.54%
2015-2016 90021-52328 37693 72.03%
2016-2017 12536-90021 -77485 -86.07%
ANALYSIS:
The above table gives the brief information regarding the cash in hand during the
period 2013-2017. The company is having a positive value of cash in hand in the year
2014-15, 2015-16 i.e., Rs.21096 (67.54%), Rs 37693 (72.03%) respectively. And in
the year 2013-14, 2016-17 the company is having negative cash balance.
GRAPH-4.13

CASH IN HAND

Cash in hand
100.00%
80.00% 67.54% 72.03%
Increase \ Decrease(%) 60.00%
40.00%
20.00%
0.00%
-20.00% 2013-2014 2014-2015 2015-2016 2016-2017
-40.00%
-60.00%
-62.56%
-80.00%
-100.00% -86.07%
Years
INTERPRETATION:
From the above graph it can be interpreted that the increase and decrease value of
cash in hand. In the year 2013-2014 the company is showing the negative value of
cash in hand because of the company fails to maintain sufficient cash balance and
shortage of working capital in the company. Later in the year 2014-2015, 2015-2016
company taken some steps to increase cash again in the year 2016-2017 value of cash
is having the negative value.
TABLE-4.14

ELECTRICITY DEPOSIT


ELECTRICITY DECREASE DECREASE
YEARS DEPOSIT (RS) (%)
2013-2014 71490-0 71490 0%
2014-2015 229345-71490 157855 220.80%
2015-2016 229346-229345 1 0.00%
2016-2017 229346-229346 0 0%
ANALYSIS:
From the above table it can be analyzed that the value of electricity deposit for the
period of 2013 to 2017. In the year 2014-2015 the value of electricity deposit has
been increased to 220.80% compared to rest of 3 years. In the year 2013-2014, 2015-
2016, 2016-2017 there is no increase in the value of electricity deposit.
GRAPH-4.14

ELECTRICITY DEPOSIT

Electricity deposit
250%
220.80%
Increase \ Decrease (%) 200%
150%
100%
50%
0.00% 0.00% 0.00%

0%
2013-2014 2014-2015 2015-2016 2016-2017
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of electricity deposit of the
company for the year 2013 to 2017. In the year the company is having high value
because the company has made deposits in the bank for the purpose electricity.
TABLE-4.15

OTHER CURRENT ASSETS


OTHER CURRENT DECREASE DECREASE
YEARS ASSETS (RS) (%)
2013-2014 66577-301241 -234663 -77.89%
2014-2015 84967-66577 18390 27.62%
2015-2016 11696-84967 -73271 -86.23%
2016-2017 0-11696 -11696 -100%
ANALYSIS:
The above table shows the value of other current assets for the period of 2013 to
2017. In the year 2014-2015 the value of other current assets is increased to 27.62%.
In the year 2013-2014, 2015-2016, 2016-2017 the company is having the negative
value of other current assets.
GRAPH-4.15

OTHER CURRENT ASSETS

Other current assets

40.00%
27.62%
20.00%
0.00%
Increase \ Decrease (%)
2013-2014 2014-2015 2015-2016 2016-2017

-20.00%
-40.00%
-60.00%
-80.00%
-77.89%
-86.23%
-100.00%
-100.00%
-120.00%
Years
INTERPRETATION:
From the above graph it can be interpreted that the value of other current assets for
the period 2013 to 2017. In the year 2014-2015 the company is maintained current
assets to meet its day to day operations, but in the year 2013-2014, 2015-2016, 2016-
2017 the company fails to maintain current assets which is very mush essential for
day to day operations and showing the negative value of other current assets.
5.1 FINDINGS
The study of assets and liabilities management, with the special reference to “UMA
INDUSTRIES”, has through light on some important they can be summarized as
follows:

 There is no issue with Sharanu patil a\c because he is investing enough capital
into business.
 In the year 2013-2014 net profit of the company is showing the negative value
because the company i-[s under loss or incurred more expenses.
 The company fails maintain sufficient balance in proprietor current a\c
because of more drawings by the in the year 2016-2017.
 Proprietor is drawing proprietor amount more so only it is showing the
negative value in the year 2016-2017.
 In the year the loans and liabilities to the company is more comparatively
because the company has taken more loans.
 The company has paid more duties and taxes to the government in the year
2014-2015, 2015-2016.
 In the year 2014-2015 sundry creditors increased because the company fails to
maintain proper working capital so they purchased goods on credit basis.
 There is no issue with other current liabilities of the company. Because the
company is having the capacity to pay its current liabilities.
 In the year 2013-2014 the company has purchased more fixed assets when
compared to other three years.
 In the year 2015-2016 the value of closing stock is increased because the company
fails to sell their products.
 The company adopted sales maximization concept in the 2014-2015 so only they are
selling the goods on credit basis.
 In the year 2013-2014 the value of loans and advances is increased because the
company is improved the liquidity position.
 In the year 2016-2017 the company fails to maintain sufficient cash balance in the
company which is required for day to day operations of the company.
 In the year 2014-2015 the company has made more deposits in electricity.

5.2 SUGGESTIONS
 Company should pay more attention towards the net profits by reducing the
company’s expenses.
 The company can minimize the current liabilities by raising the long term
loans.
 Company need to maintain the cash balance more which is necessary to meet its day
to day operations.
 Company should give concentration towards its liquidity position.

 They have maintain the proper working capital in their company by increasing the
level of current assets.
 The level of loans and advances can be maximized in order to get good
reputation or Good will.
 The company has to invest more in the tangible assets which may helps to
face future risks.
 The company has to encourage, motivate and involve employees to achieve
set organizational growth targets.
5.3- CONCLUSION
The dissertation has provided an opportunity to do the in depth study of a particular

topic. It has also helped to get an insight into the topic and its role in the present
scenario.
A study of assets and liabilities management conducted in UMA INDUSTRIES is to

analyze the financial position of the company. The financial position of the company

is analyzed by using the comparative balance sheet for the 4 years. The various assets
and liabilities of the company in the year of 2013-2014, 2014-2015, 2015-2016 and
2016-2017 are compared.
It can be stated that the company’s profitability is increasing year by year and also
there is an improvement in current financial position. The liquidity position of the
company is good because there we can see the good current assets position in the
company so there is a smooth work flow can be seen in the company.

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A STUDY ON ASSETS AND LIABILITIES MANAGEMENT

Finance is often defined as simply as management of money of “funds management

Finance performance measures assess the efficiency and profitability of investment,

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 1

In general, business may be defined as “The provision of money at the time it is

It is also defined as “Procurement of funds and their effective utilization”

The American Accounting Association defines Accounting as “The process

Finance refers to the management of flow of money through an organization. It

According to John J. Hampton, “the term finance can be defined as the

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 2

According to Howard and Upton, “Finance may be defined as that

Nowadays, finance is considered as lifeblood of every business and has

The term finance may thus incorporate any of the following:

 The study of money and other assets

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 3

Public finance Private finance Institutional finance international finance

State government Personal finance

Local self-government Business finance

Central government Finance of non- profit organization

2. Private finance: Private finance is considered with requirements, receipts and

a. Personal finance: It deals with the analysis of principles and practices

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 4

3. Institutional finance: New area of finance is developed keeping in view of

4. International finance: This area of finance focuses attention on flow of funds

AIMS OR GOALS OF FINANCE FUNCTION

The finance function has the following aims:

1. Assessing the financial requirements: The main objective of finance

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 5

SCOPE OF FINANCE FUNCTION

The scope of finance function is as following:

1. Estimation of financial requirements: the first task of financial manager is

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 6

ORGANISATION STRUCTURE OF FINANCE FUNCTION

Finance manager Accounts

Budget Cash Credit Financial Tax Internal

NATURE OF FINANCE FUNCTION

1. In most of the organizations, financial operations are centralized. This results

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 7

A financial manager is a person who is responsible, in a significant way, to carry out

FUNCTIONS OF FINANCIAL MANAGER

 He should anticipate the financial requirements.

ROLE OF FINANCE MANAGER

The different role of a financial manager is as follows:

Role of financial manager

Determining financial needs

Choosing the source of funds

Cost volume profit analysis

Financial analysis and interpretation

Working capital management

Profit planning and control

SWAMY VIVEKANANDA RURAL FIRST GRADE COLLEGE PAGE 8

1. Determining financial needs:

2. Choosing the sources of funds:

3. Financial analysis and interpretation:

The analysis and interpretation of financial statement is an important task of a

4. Cost volume profit analysis:

Capital budgeting is the process of making investment decisions in capital

6. Working capital management: