Financial performance of Kirloskar Pneumatic Co Ltd

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Last updated: March 12, 2019

It is concerned with examining the profitability position of the company for a period of five years (2007-2012). The main objective of this study is to analyse the financial performance of the company by analysing the financial statements.

Financial performance is analysed for capital adequacy, assets quality, management, earning quality and liquidity. Charts and tables are used for better understanding of the company’s performance. The study deals with findings and suggestions for the improvement of the company.INTRODUCTION FINANCE Finance is the life blood of a business.

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Circulation of blood is necessary for maintaining life in human body. In the same way, finance is absolutely necessary for the survival and smooth running of a business. Finance is one of the basic foundations of all kinds of economic activities.

It is the master key which provides access to all the sources being employed in manufacturing and merchandising activities. Finance is concerned with the flow of funds and decisions relating to business operations affecting the valuation of the firm.Therefore, finance is the fundamental requirement for any business enterprise, to carry on operations and achieve the goals. Finance may be defined as the provision of adequate amount of money when it is required.

FINANCIAL ANALYSIS Financial Analysis is the process of determining the operating and financial characteristics of a firm from accounting data and financial statements. The goal of such analysis is to determine efficiency & performance of the firm management, as reflected in the financial records and reports.Its main aim is to measure the firm’s liquidity, profitability and other indications that business is conducted in a rational and orderly way. “Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements, and a study of trends of these factors as shown in a series of statements. ” – John N. Myer. MEANING OF FINANCIAL STATEMENTS Financial statements refer to such statements which contains financial information about an enterprise.

They report profitability and the financial position of the business at the end of accounting period. It includes two statements which the accountant prepares at the end of an accounting period. They are: •The Balance Sheet •Profit & Loss A/C They provide some extremely useful information to the extent that balance sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owner’s equity and so on and the profit and loss a/c shows the results of operations during a certain period of time in terms of revenue obtained and the cost incurred during the year.Thus the financial statement provides a summarized view of financial positions and operations of a firm. FEATURES OF FINANCIAL ANALYSIS •To present a complex data contained in the financial statement in simple and understandable form.

•To classify the items contained in the financial statement in convenient and rational groups. •To make comparison between various groups to draw various conclusions PURPOSE OF ANALYSIS OF FINANCIAL STATEMENTS •To know the earning capacity or profitability. •To know the solvency. To know the financial strengths.

•To know the capability of payment of interest & dividends. •To make comparative study with other firms. •To know the trend of business. •To know the efficiency of management •To provide useful information to management TYPES OF FINANCIAL ANALYSIS Financial statements are analysed by different parties for different purposes. The analysis is done from different angles. On The Basis Of Process of Analysis •Horizontal Analysis: This is used when the financial statement of a number of years are to be analysed.

Such analysis indicates the trends and the increase or decrease in various items not only in absolute figures but also in percentage form. This analysis indicates the strengths and weaknesses of the firm. This analysis is also called as dynamic analysis because it also shows the trend of the business.

•Vertical Analysis : This is used when financial statements of a particular year or on a particular date are analysed. For this type of analysis we generally use common size statements and the ratio analysis.It involves a study of quantitative relationship among various items of balance sheet and profit and loss account. This type of analysis is static analysis because this is based on the financial results of one year. Vertical analysis is useful when we have to compare the performance of different departments of the same company. It is also known as ‘Static Analysis’ as it concentrates solely on one year financial statement. On The Basis Of Information Available •Internal Analysis: This analysis is based on the information available to the business firm only .

Hence internal analysis is made by the management. Internal analysis is more reliable and helpful for financial decisions. •External Analysis: This analysis is made on the basis of published statements, reports and information. This analysis is made by external parties such as creditors, investors, banks, financial analysis etc. PARTIES INTRESTED IN FINANCIAL STATEMENT ANALYSIS The analysis of financial figures contained in the company’s profit and loss account and balance sheet by employing appropriate technique is known a financial statement analysis.Financial statement analysis is useful to different parties to obtain the required information about the organization. Following are the parties interested in financial statement analysis.

1. Shareholders Shareholders are interested in financial statement analysis to know the profitability of the organization. Profitability shows the growth potentiality of an organization and safety of investment of shareholders. 2. Investors and Lenders Investors and lenders are interested to know the solvency position of an organization.They analyse the financial statement position to know about the safety of their investment and ability to pay interest and repayment of principle amount on due date. 3. Creditors Creditors are interested in analysing the financial statements in order to know the short term liquidity position of an organization.

Creditors analyse the financial statement to know either the organization is enable to pay the amount of short term liabilities on due date. 4. Management Management is interested to analyse the financial statement for measuring the effectiveness of its policies and decisions.It analyse the financial statements to know short term and long term solvency position, profitability, liquidity position and return on investment from the business 5. Government Government is interested to analyse the financial position in determining the amount of tax liability. It also helps for formulating effective plans and policies for economic growth.

AN OVERVIEW OF COMPANY Company being established as Kirloskar Pneumatics Company Limited in 1958, made an entry with manufacture of air compressor and Pneumatic tools and soon diversified by including air conditioning and transmission equipment.At Kirloskar Pneumatic up to date manufacturing facilities, including CNC machines, stringent quality control procedures and systems, research and development, foundry, screw rotor machines, gear grinding machines, metallurgical and metrological laboratories, tool room and an integrated computer system, have all been set up with the sole idea of achieving the highest standards of quality and performance. Kirloskar Pneumatic has the distinction of acquiring advance technologies from world over, adopting them to suit Indian conditions and continuously updating them to maintain the highest standards of quality and reliability.Kirloskar Pneumatic is among the first few companies in India, to secure the ISO 9001 certification, in all its operations. It was certified for ISO 9001 quality system by the Indian quality systems, (IRQS) in February 1993 and re-certified in 1996 and again in 1999 and in 2003. Company s products are manufactured under Survey of renowned inspection agencies such as Lioyd s, MMD, IRS, NTPL, EIL, PDIL, DGS;D, RITES, and may more, and are well accepted not only in India but also in the countries of South East Asia, Africa, Gulf, the Middle East, West Asia, Europe, and the United States of America.

Kirloskar Pneumatic Company Limited started with the manufacturing of Air – Compressors and Pneumatic Tools, Immediately thereafter, the company expanded its activities in the field of Air Conditioning and Refrigeration machinery. Further diversification in the manufacture of Hydraulic Power Transmission Equipment followed. Kirloskar Pneumatic is held in high esteem for Process System Engineering and Turnkey Project expertise.

The result of its success in this area is reflected in Company s association with virtually every project and industry in the country.PRODUCT GROUPSMAJOR CUSTOMERSMAJOR COMPETITORS Screw compressors diesel driven at 10KG/CM2Well drilling operationAtlas Copco, ELGI Screw compressors electric motor driven at 7 to 10KG/CM2Textiles, granites industriesAtlas Copco, ELGI Balanced opposed piston compressor driven at 3 to 9KG/CM2Power, Petrochemical, Cements, Steel industriesCPT, Ingersol rand Vertical reciprocating water culled. Driven at 7 to 9 KG/CM2 All small scale industriesIR,ELGI Centrifugal compressor driven by 7KG/CM2 ; above.Cement, Steel, Textile industriesAtlas Copco, Demag Railways brake compressorAll Railways ELGI RESEARCH METHODOLOGY Business research is a systematic inquiry that provides information to guide business decisions. The research Methodology is a way to solve systematically the research problem. The research methodology refers to the behaviour and instruments that is used in performing the research questions such as making observations, recording data, the technique of processing data, summarizing the results and presenting suggestions.OBJECTIVES OF THE STUDY •To identify the financial strengths and weakness of the Kirloskar Pneumatics Co Ltd.

•To understand the profitability position if the company by analysing Net Profit Ratio ; Profitability Ratio. •Evaluating company’s performance by evaluating Financial Statement Analysis. •To know the liquidity position of the company, with the help of Current Ratio. •To find out the utility of financial ratio in credit analysis and determining the financial capability of the firm.

OBJECTIVES OF FINANCIAL STATEMENTSThe Objective of Financial Statement is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial Statements are prepared for this purpose to meet the common needs of most users. SCOPE OF THE STUDY The scope of the study is to find out the financial performance of Kirloskar Pneumatic Co Ltd for the past five years. NEED OF THE STUDY Financial analysis is a powerful mechanism which helps in ascertaining the strengths and weakness in the operation and financial position of an enterprise. The study has great significance and provides benefits to various parties directly or indirectly interact with the company. •It provides clear picture regarding important aspects like Liquidity, Leverage, Activity and Profitability.

•The study is also beneficial to employees and offers motivations by showing how actively they are contributing for the company’s growth. •The investors who are interested in investing in the shares will also get benefited. IMPORTANCE OF THE STUDY 1. Providing Information for Economic DecisionThe economic decisions that are taken by users of financial statements require an evaluation of the ability of an enterprise to generate cash and cash equivalents and of the timing and certainty of their generation. This ability ultimately determines the capacity of an enterprise to pay its employees and suppliers, meet interest payments, repay loans and make distributions to its owners. 2.

Providing Information about Financial Position The financial position of an enterprise is effected by the economic resources.It controls, its financial structure, its liquidity and solvency and its capacity it adopt to changes in the environment in which it operates. •Information about the economic resources controlled by the enterprise and its capacity in the past to modify these resources is useful in predicting the ability of the enterprise to generate cash and cash equivalents in the future. •Information about financial structure is useful in predicting future borrowing needs and how future profits and cash flow will be distributed among those with an interest in the enterprise. Information is useful in predicting how successful the enterprise is likely to be in raising further finance. •Information about liquidity and solvency is useful in predicting the ability of the enterprise to meet the financial commitments as fall due. Liquidity refers to the availability of cash in the near future after taking account of financial commitments over this period.

Solvency refers to the availability of cash over the longer term to meet financial commitments as they fall due. 3. Providing Information about Performance of an EnterpriseAnother important objective of the financial statements is that it provides information about the performance and in particular its profitability, which is required in order to access potential changes in the economic resources that are likely to control in future. 4. Providing Information about Changes in Financial Position The financial statements provide information concerning changes in the financial position of an enterprise, which is useful in order to access its investing, financing and operating activities during the reporting period.SOURCES OF DATA COLLECTION Primary Sources Primary sources (also called original source or evidence) are original materials. It serves as an original source of information about the topic. Secondary Sources Secondary data is generated with the help of following: Annual Report: Majority of information gathered from data exhibited in the annual reports of the company.

These include annual reports of the year 2007-08, 2008-09, 2009-10 and 2010-11, 2011-12. Induction Manual: Information relating to company history and profile gathered from the induction manual of KPCL.Reference Books: Theory relating to the subject matter and various concepts taken up from various financial reference books.

CMA statement: Information relating to estimation of funds and format of reporting, taken from CMA (Credit Monitoring Arrangement) statement of the company. Loan Agreement: Information relating to various rules and regulations for bank finance taken up from loan agreement between KPCL and consortium banks. AREA OF THE STUDY The study aims at analysing the ratios of “Kirloskar Pneumatics Co Ltd” covering a period of five years from 2007 – 2008 to 2011 – 2012. PERIOD OF THE STUDYThe study covers a period of Five Financial years from 2007 – 2008 to 2011 – 2012. TOOLS OF ANALYSIS OF FINANCIAL STATEMENTS RATIO ANALYSIS •Liquidity Ratios •Turnover Ratios •Profitability Ratios •Leverage Ratios LIMITATIONS OF THE STUDY •The study provides an insight into the financial aspect of Kirloskar. •The project is confined to secondary data and annual report of the company. •Time is an important limitation. Due to time constraint, the study is confined to a period of five years only from 2007 – 2008 to 2011 – 2012 which is short period to evaluate the efficiency of the management.

CHAPTER SCHEME CHAPTER I Introduction – An Overview of the Company, Research Methodology, Need of the Study, Importance of the Study, Objectives, Sources of Data Collection, Area of the Study, Period of the Study, Tools of Analysis, Limitations of the Study. CHAPTER II Review of Literature CHAPTER III Kirloskar Pneumatics Co Ltd – History, Kirloskar Group of Companies, Infrastructure, Product line. CHAPTER IV Ratio Analysis And Interpretation, Tables, Graphs. CHAPTER V Findings, Suggestions and Conclusions. Chapter II Review of Literature CHAPTER II REVIEW OF LITERATUREIt is mandatory to review the literature available with respect to the area of the research study. Measuring the performance of the corporate sector has always been the area of controversies from the point of view of the government, shareholders, prospective investors, creditors, employees and other stakeholders. Several studies have been undertaken to analyse the financial performance in the corporate sector.

The present chapter presents some of the studies conducted by the financial analysts in the past. Financial Performance Analysis-A Case StudyCurrent Research Journal of Social Sciences 3(3): 269-275, 2011 ISSN: 2041-3246 © Maxwell Scientific Organization, 2011 Abstract: The present study aims to identify the financial strengths and weaknesses of the Indian public sector pharmaceutical enterprises by properly establishing relationships between the items of the balance sheet and profit and loss account. The study covers two public sector drug and pharmaceutical enterprises listed on BSE.

The study has been undertaken for the period of twelve years from 1997-98 to 2008-09 and the necessary data have been obtained from CMIE database.The liquidity position was strong in case of both the selected companies thereby reflecting the ability of the companies to pay short-term obligations on due dates and they relied more on external funds in terms of long-term borrowings thereby providing a lower degree of protection to the creditors. Financial stability of both the selected companies has showed a downward trend and consequently the financial stability of selected pharmaceutical companies has been decreasing at an intense rate.The study exclusively depends on the public sectors published financial data and it does not compare with private sector pharmaceutical enterprises. This is a major limitation of the research. The study is of crucial importance to measure the firm’s liquidity, solvency, profitability, stability and other indicators that the business is conducted in a rational and normal way; ensuring enough returns to the shareholders to maintain at least its market value. The study will help investors to identify the nature of Indian pharmaceutical industry and will also help to take decision regarding investment.

Paul J. Fitz Patrick (1932) has conducted a study on 20 failed and 19 non-failed firms applying a trend of 13 financial ratios to examine whether there was a significant difference in the trend of ratios, at least three years prior to the failure he has found that there was a persistent difference and significant difference in all the ratios of failed firms in relation to those of non-failed firms. The best indicators were Net-profit to Net worth to Total debt and Net worth to fixed assets.Charles Merwin (1942) has found out that ratios are successful predictors of failure in five years prior to discontinuance.

The ratios namely Net-working capital to Total assets, Current ratio, Net-worth to Total debt were found to be extremely sensitive and the most significant predictor among them. Bain (1951) through his study on ‘Relation of profit rate of industry concentration’ found that the differences in industry concentration ratio or barrier to entry. He asserted the hypothesis by finding a correlation co-efficient of 0. 28 between rates of return on Net-worth of 42 industries.Beaver (1966) has taken a trend of 30 financial ratios for 79 paired failed and non-failed United States firms and has found that there was a significant difference in the ratios of both category of firms. In 1969 he has made a comparison of predictive ability of different ratio of the same paired firms and he has identified that three ratios namely Cash flows to Total debt, Net income to total assets and total debt to total assets are the best indicators. He has identified that the ratios of failed firms differed significantly from those of non-failed firms and they deteriorated sharply during the last five years prior to failure.SAMILOGLU ; DAMIRGUNES (2008) said that even though the profitability is constantly positive, inaccurate working capital management procedures may lead to bankruptcy of the firm.

They suggest that current, acid test, and cash ratios as traditional measures of liquidity are incompetent and static balance sheet measures that cannot provide detailed and accurate information about working capital management effectiveness. In their research formulas used for calculating them consider both liquid and operating assets in common and traditional ratios are not meaningful in terms of cash flow.NANDI (2011) made an attempt to examine the influence of working capital management on corporate profitability.

For assessing impact of working capital management on profitability of National Thermal Power Corporation Ltd. during the period of 10 years i. e. , from 1999-2000 to 2008-09 Pearson’s coefficient of correlation and multiple regression analysis between some ratios relating to working capital management and the impact measure relating to profitability ratio (ROI) had been computed and applied.An attempt had been undertaken for measuring the sensitivity of return of investment (ROI) to changes in the level of working capital leverage (WCL) of the studying company. KARADUMAN, AKBAS ; CALISKAN (2011) have tried to shed light on the empirical relationship between efficiency of working capital management and corporate profitability of selected companies in the Istanbul Stock Exchange for the period of 2005-2009.The companies should focus on working capital management in order to increase their profitability by seriously and professionally considering the issues on their cash conversion cycle which was derived from the number of day’s accounts payable, the number of day’s accounts receivable and the number of days of inventories. The findings suggested that it may be possible to increase profitability by improving efficiency of working capital.

MALLICK AND SUR (1998) made an attempt to analyse the impact of working capital management on profitability in Indian Tea industry with the help of some statistical tools and techniques.The study revealed that, out of the nine ratios relating to working capital management five ratios registered positive association and the remaining four ratios showed negative correlation with the profitability indicator. Rao ; Rao (1999) undertook a similar type of study where ten ratios relating to working capital management were selected. Out of these indicators, positive association was noticed only in three. CHEAKRABORTY (2008) evaluated the relationship between working capital and profitability of 25 selected companies in the Indian pharmaceutical industry during the period 1996-97 to 2007-08.Inadequacy of working capital may lead to the firm to insolvency, whereas excessive working capital implies idle funds which earns no profits. Therefore, efficient management of working capital is an integral part of the overall corporate strategy to improve corporate profitability. The partial regression coefficients shown in the multiple regression equation of ROCE on CR, ITR and DTR fitted in this study revealed that the liquidity management, inventory management and credit management made positive contribution towards improvement of the corporate profitability.

Altman (1968) took 66 firms in general and applied Multiple Discriminant Analysis to discriminate the failed firms from the non-failed firms as the basis of weighted combination of five financial ratios. The Weighted combination of Working capital to total liabilities, cumulative retained earnings to total assets, Earnings before interest and taxes to total assets, Market value of equity to book value of total debt and Sales to total assets was able to predict the bankruptcy with 45% degree accuracy.He also found that the predictive ability of the model declined very sharply when the number of years prior to the failure increased. Samules and Smith (1968) in their study on “Profits, variability of profits and firm size” have found the relationship between profitability (profit after tax on net assets) and size of the firm (net assets) and revealed that they were inversely related to each other for the years 1954-1963. Roger Cossaboom (1971) in his study “Lets Reason the profitability – liquidity Trade- off” has found out the significant importance gained by the profitability – Liquidity off.

He has identified four aspects namely liquidity, flexibility, sensitivity, innovation and segmental financing which should be examined by the firm to reduce the firms vulnerability to further liquidity squeeze he has identified financial flexibility and innovation by financial managers as the best approach for further liquidity management. Pinches, Mingo and Cauthers (1973) have applied factor analysis to classify 51 log transformed financial ratios of 221 compustat firms for four cross section of six years apart.The section of the method was prompted by application in other behavioural disciplines like psychology and organizational analysis. They identified seven factors Return on Investment, Capital intensiveness, Inventory intensiveness, financial leverage, Receivables intensiveness, short-term liquidity and cash position. These factors explained 78-92% of the total variance of the 51 financial ratios. Moreover the correlations for the factor loadings and the difference R-Factor analysis indicate that the ratio patterns are reasonably stable over time.

Banerjee (1974) studies the dangers of too little working capital and too much working capital by taking a case study he used certain ratio in order to analyse the working capital management performance. N. Krishna Rao and N.

Ramachandran (1977) studied the likely impact of reduction in current assets on the return on capital via the principal of working capital leverage for the few companies operating in the Indian corporate sector. For his study 18 companies belonging to 12 industry groups have been chosen.Johnson (1978) runs the factory analysis for a single year 1972 but for two industries based on a sample of 306 primary manufacturing and 61 retail firms. Congruency co-efficiency of financial ratios patterns indicates a good stability of the nine factors for the two industries. Bhabatosh Banerjee (1988) analysed the different turnover ratios such as debtors and the creditor’s turnover as well as the stock turnover ratio. The cash position and the cash movement are also examined with the effect of liquid ratio.Chen and Shimerda (1989) present a summary of the financial ratios used in a number of the early studies which used the financial ratios for analysis and prediction.

They note that there is an abundant 41 different financial ratios which are found useful in the earlier studies. They reconcile by judgment the factors in their earlier studies into financial leverage, Capital Turnover, Inventory Turnover, Receivables Turnover short term liquidity and cash position. They identify ten financial ratios which are representative of the seven factors.Panigrahi (1990) examined the liquidity position of the large Indian Companies for the period 1970-1971 to 1986-1987 with the help of standard financial ratio and working capital ratio have been computed to explain the significance of association between the ratios. Mansur A. Mulla (2001) have evaluated the financial stability and operation health of textile mills in the co-operative sector using Altman’s z scores analysis and found that the mill is in the verge of financial collapse due to inadequate working capital, negative earnings efore interest and taxes and poor liquidity position and the unit has to tone up the efficiency and effectiveness of the organization. K. Sankaran (2002) have applied altmans z score analysis to estimate the financial health of 10 pharmaceutical companies in India out of which five Indian companies and five Multinational corporations and has developed a model stating that if the z is less than 1:81, it indicates that the company is moving towards bankruptcy and if the z score lies between 1:81 and 2:99 it means grey area for the company and if the score value is above 2:99 it means that the company is healthy.

He has found that four out of five Multinational corporations were healthy and one falls in the grey area but in the case of the Indian Companies one falls in the healthy category three were in grey area and one in the bankruptcy zone. G. Sudarsasna reddy (2002) have analysed the financial performance of paper industry in Andhra Pradesh and suggested the following ways to strengthen the profitability position of the paper mills. ) Restructuring of finances ii) Modernization of technology for better operating performance iii) Use of fixed assets efficiently iv) Creation of adequate depreciation provision v) Optimization of inventory management vi) Strengthen the degree of liquidity vii) Adoption of sound credit viii) Cost minimization. Title: A Systematic Approach to Contextual Analysis in Small Business Asset- based Lending Authors: Scott, Stanl Sources: Secured Lender; Nov/Dec 2005, Vol 61 Issue 6, p104-113, 6p Abstract: The article provides information on a systemic approach to contextual financial analysis in small business asset- based lending.

The objective of financial statement analysis is to interpret result in a business environment. Key factors to consider in evaluating management impact on financial result include the company’s attempt to distinguish itself from competitors. Bollen (1999) conducted a study on Ratio Variables on which he found three different uses of ratio variables in aggregate data analysis: (1) as measures of theoretical concepts, (2) as a means to control an extraneous factor, and (3) as a correction for heteroscedasticity.In the use of ratios as indices of concepts, a problem can arise if it is regressed on other indices or variables that contain a common component. For example, the relationship between two per capita measures may be confounded with the common population component in each variable.

Regarding the second use of ratios, only under exceptional conditions will ratio variables be a suitable means of controlling an extraneous factor. Finally, the use of ratios to correct for heteroscedasticity is also often misused. Only under special conditions will the common form forgers soon with ratio variables correct for heteroscedasticity.Gerrard (2001) conducted a study on The Financial Performance on which he found that Using ratio analysis the financial performance of a sample of independent single-plant engineering firms in Leeds is examined with regard to structural and locational differences in establishments. A number of determinants of performance are derived and tested against the constructed data base. Inner-city engineering firms perform relatively less well on all indicators of performance compared with outer-city firms. The study illustrates the importance of using different measures of performance since this affects the magnitude and significance of the results.Financial support is necessary to sustain engineering in the inner city in the long run.

Johnson (2009) conducted a study on Financial Ratio patterns on which he found that the properties and characteristics of financial ratios have received considerable attention in recent years with interest primarily focused on determining the predictive ability of financial ratios and related financial data. Principal areas of investigation have included the prediction of corporate bond ratings and the anticipation of financial impairment].Related studies have examined the characteristics of merged firms the differences in financial ratio averages among industries whether firms seek to adjust their financial ratios toward industry averages the relationship between accounting-determined and market-determined risk measures, and the influence of financial ratios on analysts’ judgments about impending bankruptcy The general conclusion to emerge from these various research efforts is that a number of financial ratios have predictive and descriptive utility when properly employed.Title: Analysing The Financial Condition Of City Of Corona, California: Using A Case To Teach The Gasb34 Government – Wide Financial Statements. Authors; Chaney, Barbara A. 1, Source; Journal of Public Budgeting, Accounting & Financial Management; Summder2005, Vol. 17 Issue2, p180-201, 22p, 4charts Abstract: A financial statement analysis case uses the government-wide financial statements of Corona, CA to teach students about the financial overview provided in the new governmental financial reporting model.

Educators are struggling to incorporate the new model in their governmental accounting curricula.The case analysis is beneficial to students in three ways. First the active, case learning approach of using a real world example complements existing pedagogical materials for better mastery of the new reporting model.

Second, the case approach of using ambiguity and alternative solution and class discussion promotes the development of communication skills. To summarize the literature, Ratio analysis is a key dimension of financial management, suggesting a relationship between profit and loss as mentioned in the balance sheet of an organization. Its appropriate use will go toward giving a true picture of the financial health of the unit.Its benefits can be seen in areas of management, production, marketing, personnel management etc.

Chapter III Company Profile COMPANY PROFILE HISTORY Kirloskar Pneumatic Company Limited was incorporated by late. Shri Shantanurao, Kirloskar in the year 1958. The name Kirloskar is synonymous with quality and dependability in the engineering industry.

Pioneering industrial revolution in India, Kirloskar group has contributed immensely in every field of its operation during its 120 year-long journey, and holds a place of repute in the industry for its good business values and customer focus. Kirloskar Pneumatic Company Ltd. KPCL) is one of the core group companies. KPCL was incorporated in 1958 under the chairmanship of Late Shri Shantanurao Kirloskar. KPCL is certified for Integrated Management System (IMS) Certifications of ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, by TUV NORD.

The company started its operations with the manufacture of Air Compressors and Pneumatic Tools. New product lines were then added, including Air Conditioning and Refrigeration systems, Marine HVACR, Process Gas systems and Hydraulic Power Transmission machinery. The company has also earned an enviable reputation for its Systems Engineering and Turnkey Project expertise.Over the years, Kirloskar Pneumatic Company Ltd. has developed various sophisticated and high-tech products in the above categories to cater to the demands of various industrial sectors. KPCL has also established a number of joint ventures and technology partnerships with leading global companies. It has earned the distinction of developing a host of advanced products to suit Indian conditions and has been continuously updating them to maintain the highest standards of quality and reliability.

OUR CORPORATE PHOLOSOPHY Our Mission We will demonstrate an EDGE to all our Stakeholders in our offerings for converting / transmitting energy.We will strive to make our Company an employer of Choice. Values In an ever changing world one thing that will remain constant is our Commitment towards all our stakeholders. Each one of us will be guided by the following values.

?CUSTOMER FOCUS Our activities / actions will be focused on enhancing internal / external customer’s satisfaction ? COMMITMENT We commit to achieve our targets / goals. We will be responsible / accountable for our commitment. ?CONTINUAL IMPROVEMENT We will consciously work to improve our procedures, processes and systems with an objective to improve our business processes. ?

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