PROJECT REPORT ON
INDEX
|S.No |Contents |Page No. |
|Chapter I |Introduction |2-6 |
| |Scope of the Study | |
| |Objectives of the Study | |
| |Methodology of the Study | |
| |Limitations of the Study | |
|Chapter II |Industry profile |7-34 |
| |& | |
| |Company profile | |
|Chapter III |Review of Literature |35-64 |
|Chapter IV |Data analysis and Interpretation |65-78 |
|Chapter V |Findings |79-83 |
| |Suggestions | |
| |Conclusions | |
| |Bibliography | |
CHAPTER-I INTRODUCTION
INTRODUCTION
Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management.
When analyzing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis.[1] The term is used to distinguish such analysis from other types of investment analysis, such as quantitative analysis and technical analysis.
Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives:
➢ To conduct a company stock valuation and predict its probable price evolution,
➢ To make a projection on its business performance,
➢ To evaluate its management and make internal business decisions,
➢ To calculate its credit risk.
Investors can use any or all of these different but somewhat complementary methods for stock picking. For example many fundamental investors use technical for deciding entry and exit points. Many technical investors use fundamentals to limit their universe of possible stock to 'good' companies.
SCOPE OF THE STUDY:-
➢ To understand the scope of the financial management, we must examine the traditional as well as the modern approach of the financial management.
➢ The traditional approach to the financial managements restricted to raising to funds from various sources and completion of the legal formalities required to do the same.
➢ The modern approach to the financial management says that there are three important functions which are expected to be performed by the financial management.
➢ Increasing gross profit by setting the correct pricing for the products or services.
➢ Controlling the level of general and administrative expenses by finding more cost efficient ways of running the day-to-day business operations, and
➢ Tax planning that will minimize the taxes a business has to pay.
NEED AND IMPORTANCE OF THE PROJECT
Fundamental analysis involves analyzing the characteristic of the company in order to estimate its value.
“A methods of evaluating a security, by attempting to measure its intrinsic value, by examine related economic, financial and other qualitative, as well as quantities factors”, is casually as Fundamental Analysis.
Fundamental analysis attempt to study everything that can affect the security’s value, including macroeconomics factors (like the overall economy and industry) and individually specific factors (like the financial companies)
Fundamental analysis is about using real data to evaluate a security’s value. Fundamental analysis really just studies in an attempt to determine what direction, or trend, will continue in the future.
In other words fundamental analysis attempts to understand the emotion in the market by studying the components. If you understand the benefits and limitations of fundamental analysis, it can give you the new set of tools or skills that will enable you to be a better trader or investor. Investor uses this form of analysis at the beginning point for their decision-making. Investors use the fundamental analysis in making decision about whether to buy or sell stock. The only thing that matters is a security past trading data and what information this data can provide about where the security might move in the future.
There is the belief that without fundamental analysis it would be near impossible to understand and predict where the market is heading, and to act upon anything other than instinct. But many time all analysis proved wrong and market sentiments become the real winner. So, it is not advisable to completely depend on the analysis, an investor should give all the factors, equal importance.
The concept of Fundamental Analysis arises out of the investment decisions made under financial management. The investment management lies in choosing the appropriate investment avenue from the various alternatives available in order to meet the specified goals like high returns, high liquidity preferences, low risk etc within the investment constraints like risk tolerance, tax liability, legal constraints etc.
There are various investment avenues for an investor like Gold, real estate, Government Bonds and equity Shares. Among the all, investment in equity shares is considered to be the best form of investment because here the rate of return and liquidity is considered to be high. But here the risk factor is also very high. So one needs to have an understanding of risk associated with equity investments.
Security Analysis stands for the proposition that a well-disciplined investor can determine a rough value for a company from all of its financial statements, make purchases when the market inevitably under-prices some of them, earn a satisfactory return, and never be in real danger of permanent loss.
There are three approaches to analyses the securities. There are
• Fundamental analysis
• Technical analysis
• Efficient market hypothesis
Fundamental Analysis
Fundamental Analysis is method of evaluating a security by attempting to measures its “intrinsic values” by examine the qualitative and quantitative factors. Fundamental Analysis is the analysis, wherein the investment decisions are taken on the basis of financial strength of the company. By applying the concept of intrinsic value the investor can decide whether to Buy/Sell the security. If the intrinsic value of a stock, if the current market price, the investor would purchase the stock. However, if the investor found through analysis that the intrinsic values of a stock was below the market price, the investor would sell the stock.
Technical Analysis
It is a method of evaluating the securities by analyzing statistics generated by market activity such as past prices and volume. Technical Analysis do not attempt to measure a securities intrinsic values but instead use charts and other tools to identify patterns that can suggest future activities.
Technical analyst believe that the historical performance of stocks and market or indications of future performance.
There are different types of charts available for technical analysis they are:
• Line Charts
• Bar Charts
• Point and Figure Chart
• Japanese Candlestick Chart
OBJECTIVES OF THE STUDY
The main objective of the study is to analyze and interpret the market conditions and the next crucial trends that will follow in the near future. Fundamental analysis is about using real data to a security’s value.
• To understand the macro economic variables those will an impact on the company progress.
• To study the various trends, opportunities, challenges of the industry in which the company operates.
• To understand the various policies of the company those have impact on the financial performance of the company.
• To understand the various investment valuation models that can be used.
• To select the appropriate model that suits the stock.
• Find the intrinsic value of the stock and compare with market value of the study.
• To recommend whether to buy, hold or sell the stock based on the analysis.
• To know the customer’s satisfaction.
• To know the perception of customer’s regarding the charges/rates offered by the service centre.
• To know the suggestions from customer’s.
Research Methodology:
The research study was made keeping in mind the various factors that were worked out informal discussion with the Companies, that would be included as a research object and the study can be based on the objectives.
Steps in the Research Design:
• Define the research problem
• Estimate the value of information
• Select the data collection method
• Select the measurement technique
• Select the sample
• Select the Analytical Approach
• Evaluate the ethics of the Research
• Specify time and financial cost
• Prepare the Research Proposal
The information necessary for this research data collected by typing primary and secondary sources. The sources are as follows:
• Primary Sources:
a) Questionnaire
b) Personal interaction
• Secondary Sources:
a) Company Websites
b) Related Information from Internet
c) Company Reports Books and Publications.
LIMITATIONS OF THE STUDY
The major limitations of financial analysis are as under:
• Ignores the qualitative statements – Since the financial statements are concerned to the monetary matters only, the qualitative elements like quality management, quality of labor, public relations are ignored while carrying out the analysis of financial statement only.
• Not free from bias – In many situations, the account has to make choice out of various alternatives available, e.g. choice in the method of depreciation, choice in the method of inventory valuation etc. since the subjectivity is inherent in personal judgment, the financial statement are therefore not free from bias.
• Estimated position on ongoing concern basis – Since the financial statement are prepared on a ongoing concern basis as against liquidation basis, they report only the estimated periodic results and not the true results since the true results can be ascertained only on the liquidation of the enterprise.
CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE
FUNDAMENTAL ANALYSIS
Fundamental analysis as mentioned above is a method of evaluating a security by attempting to measure its intrinsic value. It help in making decisions on the basis of the financial strength of the company. There are two approaches to fundamental analysis, viz., E-I-C analysis or the top down approach and C-I-E analysis or the bottom up approach. Fundamental analysis using EIC/ Top-Down approach can be performed in three ways:
• Economic analysis
• Industry analysis
• Company analysis
In the Top down approach. First of all the overall Economy is analyzed to judge the general direction, in which the economy is heading has a bearing on the performance of various industries. The output of the Economy analysis is a list of industries, which should perform well, given the general trend of the economy and also an idea, whether to invest or not in the given economic conditions.
As per the researchers made, it is found that the price of a stock is influenced by the following factors:
Economic Factors: 30-35%
Industry Factors : 15-20%
Company Factors : 15-25%
INTRINSIC VALUE
Fundamental analysis is primarily concerned with determining the intrinsic value of a security. Intrinsic value of a security is that value which is justified by the facts e.g. assets, earning, dividends, definite prospects including the factors of management of the company. The intrinsic value is then compared with the security’s current market price. The intrinsic value of the security must be determined using estimating of all major factors e.g. GNP of the economy, industry sales, firm sales and expenses and capitalization rates.
OBJECTIVES OF FUNDAMENTAL ANALYSIS
The main objectives of the fundamental analysis are as follows:
➢ Fundamental analysis is an attempt to identify the under priced and over priced securities in the market place so that the investment decisions-buying and selling, can be made.
➢ The fundamental analysis view investment as long term decisions. The end objective of this analysis is not to make speculative profits, rather it is to avoid the risk of loss from buying an overpriced stock and selling an under priced stock.
➢ Another objective of fundamental analysis is to beat the market.
As fundamental analysis is based on factors like economic climate and trends in financial markets, it generally gives more realistic estimate of the value of a stock. The fundamental analysis is helpful in estimating the basic standards. But cannot be totally relied upon because of the uncertainties associated with the economic and market factors.
ECONOMIC ANALYSIS
The first step in top-down approach is economic analysis. It is very important for the investor to asses the state of the economy and its implications for the stock market. The commonly analyzed macro economic factors are:
Gross Domestic Project
Gross Domestic Product represents the aggregate value of the goods and services produced in the economy. It indicates the rate of growth of the economy. Gross domestic product includes:
Personal consumption Expenditure
Gross Private Domestic Investment
Government Expenditure on goods and services
The growth rate of GDP is a sign of economy prosperity. It points out the prospects for the industrial sector, and the return investors can expect from investment in shares. The higher growth rate is more favorable in the stock market.
Investment and savings
Savings is abstaining from present consumption for the future use. It is a function of interest rates. That is if there is an increase in interest rates, the savings are mobilized. High rate of saving and investment lead to capital formation, which leads to general economic and industrial prosperity, plans for setting up of capital intensive industries and their expansion and diversification.
“The higher the level of savings and investment the more favorable it is for the stock market”
Interest
The interest rates affect the cost of financing to the firms. Decrease in interest rates implies lower cost of finance for finance for firms and more profitability. More money is available at lower interest rates for the brokers who are doing business with borrowed money. Availability of cheap funds encourages speculation and rise in the price of shares.
Tax Structure
The government announces every year the tax policy in which concessions and incentives are given to a certain industry, encourages investment in that particular industry. Tax relief given to industries encourages savings. The minimum alternatives tax levied by the Finance Minister in 1996 adversely affected the stock market. The type of tax exemption has an impact on the profitability of the industries.
Monsoon and agriculture
Agriculture is directly and indirectly linked with industries.
For Example: Sugar, Cotton, Textiles and Food processing industries depend upon Agriculture of Raw material. Fertilizer and Insecticide industries are supplying input and results in Bumper crop. This would lead to buoyancy in the stock market. When the monsoon is bad, Agriculture, and Hyde power production would suffer. This casts a shadow on the shares market.
Infrastructural facilities
Infrastructural facilities are essential for the growth if industrial and agricultural sector. A wide network of communication system is a must for the growth of the economy. Regular supply of power without any power cut world boost the production. Banking and Financial sector also should be sound enough to provide adequate support to the industry and agriculture. Good infrastructural facilities affect the stock market favorably. In India even though infrastructural facilities have been developed, still they are not adequate. The Government has liberalized its policy regarding the communication transport and power sector.
For Example: Power sector has been opened up to the foreign investors with assured rates of return.
Political Stability
Political stability is very essential for good performance of the economy. It is indicated by stable and long term economic policies and stable political system with no uncertainties. Political uncertainties adversely affect the industrial growth and in turn the stock market.
Balance of Trade
Balance of trade and the price of the currency in the foreign exchange market, also affect the security market. A deficit in trade and balance of payments position depreciate the currency in foreign exchange markets and has a negative influence on the economy and securities market.
Economic Forecasting
To estimate the stock price changes, an analyst has to analyze the macroeconomic environment and the factors peculiar to the industry he is concerned with. For the purpose economic analysis the analyst should be familiar with the forecasting techniques, which help in deciding the right time for investment and the type of security he has to purchase.
The commonly used techniques are:
• Economic Indicators
• Diffusion Index
• Surveys
• Economic Model Building.
Industrial Analysis
An industry can be defined as “A group of productive or profit making firms that have similar technological structure of production and produce or supply technically substitutable goods, services, or sources of income.”
After the analysis of the economy if the analyst is convinced that the economy is favorable for investing in stock, he then analyses those industries that produce most profitable opportunities.
The industry analysis can be classified into:
Business Cycle Analysis
Life Cycle Analysis
Business Cycle Analysis
An industry can be analyzed in terms of its operational ability in relation to the economy as a whole. An investor should analyze the industries operational efficiency in relati0n to the economic growth. This is because some industries fluctuates, some grow regardless of setback in the economy while some may decline through the economy prospers.
The classification of the industries based on the above relationship can be as follows:
Growth Industries
The growth industries have special features of high earnings and growth in expansion,
Independent of the business cycle. The analyst has to identify the growth industries for investment in order to maximize the rate of return.
Cyclical Industry
The growth and profitability of the industries under this category move along with the business cycle. During the boom period they enjoy growth and suffer a set back during depression.
For Example: the white goods.
Defensive Industry
These industries are those, which defy the movement of business cycle. That is the stocks of the defensive industries can be held by the investor for income purpose. They expand and earn income in the depression period too.
EX: FMCG Industries.
INDUSTRY LIFE CYCLE ANALYSIS
The Life Cycle of the industry is separated in to four well-defined stages:
Pioneering Stage
The prospective demand for the product is promising in the stage and the technology of the product is low. The demand for the product attracts many producers to produce the particular product. There would be severe competition and only fittest companies survive this stage. The severe competition often leads to the changes of position of the firms in terms of market shares and profits.
Hence an analyst has to identify the likely survivors and future strong performers as the expected rate of return is very high in such successful firms but here the risk is also high as it is difficult to select the companies whose survival rate is unknown.
Rapid growth stage
This stage starts with the appearance of surviving firms for the pioneering stage. The companies that have withstood competition grow strongly in the marker share and financial performance. The technology opf the product will be improved resulting in low cost of production and good quality products. The companies have stable growth rate in this stage and they declare dividends to the shareholders.
Thus an investor must respond quickly and expand his investments during the rapid growth stage as the growth of the industry is rapid.
Maturity and Stabilization stage
In the stabilization stage the growth rate tends to be moderate, sales grow but at a lower place as compared before. The industry continues to move but with no significant increase in the profits and this are the period where stagnation occurs. Thus an investor who is primarily interested in capital gains should moderate his investments or avoid such industries completely as the growth prospects are low and the dividend payout may be relatively low.
Decline Stage
This is the last stage of the industry life cycle where the demand for the product and the earnings of the company start declining due to the changes in the tastes of the Consumers, innovations of the new products, new technology etc. Hence an investor should avoid investing in the shares of the low growth industries as this leads to capital erosion.
Company Analysis
The output of the economy analysis is a list of industries, which should perform well. An analyst has to identify the company that performs superior in the industry.
The general decision rule applied by the analysis to attain the goal of the capital appreciation is:
➢ To buy the shares at low price
➢ Sell the shares at a high price
This decision rule is simple to understand but difficult to apply in actual practice. The problem is to how to find out whether the stock is priced correctly or not. Fundamental analysis helps an analyst to overcome this problem by proving a bench mark in terms of intrinsic value. The intrinsic value can be raised by analyzing the economy, industry and company fundamentals. Among these three parameters the company analysis provides a direct link between the investor action and his investment goal operational terms. This is because an investor buys the equity shares of the company and not in the industry or economy. Nevertheless the industry and economy analysis only provides proper backgrounds against which analyst buys the shares of particular company. Therefore analysis of companies fundamentals is very essential.
The analysis of fundamentals can be classified as follows:
➢ Qualitative Factors
➢ Quantitative Factor
Qualitative Factors
Promoters Background
The promoter’s background: The Promoters are the backbone of the company. They promote the company and some of them are also include in the top level management of the company. An analyst should know about the promoter’s background, their experience and managerial skills and efficiencies, group to which they belong.
Managerial Appraisals
An analysis should carefully apprise the management of the company because the future developments of the company are fully in the hands of the management. The Organizations should be lead with a good management team.
Technological Aspects
The company should be using latest technologies and should be in pace with in the technologies. The manufacturing and capital intensive industries should pay more attention towards technological aspects.
Expansion and diversification
When affirm achieves 100% capacity utilization, it wishes for expansion. This indicates that the product has a large market share and brand loyalty. The management that has high risk bearing capacity prefers expansion to stability gives more financial and other rewards.
Industrial Relationships
Industrial relations mean the company‘s relation with the competitors etc. Good relationship implies the firm’s image. Therefore, the company has to maintain balanced relationship between the internal as well as external factors.
Quantitative Factor
Gaining a true picture of a company’s finances means scrutinizing the financial statements. This primary source of the information for evaluating the investment prospects in the particular company’s stocks. The analysis of the financial statement statements reveals the nature of relationship between income and expenditure, source and applications of funds.
Towards this end, we can use the simple analysis techniques like:
➢ Trends analysis
➢ Ratio analysis
TREND ANALYSIS
The technique of trend Analysis is very important in company analysis, it is useful to understand the historical behavior of the variable of the purpose of security analysis. In Trend Analysis, the relationship of only one variable is examined over time i.e.; for over a period of years using the egression techniques.
Through Trend Analysis we, examine the past behavior of the following factors such as:
1. Sales: Sales mean the turnover of the company. Sales can be analyzed both in terms of the rupees and unit. The increase in the sales of a product of a company shows that the demand for the product is also increasing. Thus it is a good sign for a company sales should also be analyzed in terms of rupees because sometimes sales in units increase, but there is not an equal growth in sales in terms of rupees.
2. Gross Profit: It is that portion of income after meeting the direct material; direct labour expenses and other direct expenses. The Gross profits of accompany should be high enough to cover operating, administration and distribution expenses.
3. Net Profits: An increase in gross profit along with an increase in net profit, is very good sign and signifies that the company is growing company. Net profit is the part of gross profit which is arrived at after accounting for the other operating, administrative and distribution expenses and incomes.
4. Dividend history of the Firm: An investor gains both capital appreciation and dividends. Dividends are the regular income received by the share holders. The company that distributes higher dividends is perceived as a good company by the investors.
5. Return on Net Worth: It is also called as return on Owners Equity. It is a measure of the rate of the return or profitability of the stockholder’s investments. It is calculated by dividing Net Earnings by Net worth.
RATIO ANALYSIS:
Ratio is a relationship between two figures expressed mathematically. Ratios summarize the data for easy understanding, comparison and interpretation. Financial ratios provide the numerical relationship between two relevant financial data. Financial ratios can be calculated from the balance sheet and profit and loss a/c.
FINANCIAL RATIOS CAN BE DIVIDED IN SIX GROUPS:
1. MEASURE OF LIQUIDITY
Current Ratio:
It is the most popular ratio to analyze the liquidity. Liquidity means the ability of the firm to meet its short- term obligations. The higher the ratio, the greater the liquidity. As a rule of thumb, a healthy company’s current ratio is 2:1 or greater.
Current Ratio= Current Assets / Current Liabilities
2. MEASURE OF TURNOVER
These ratios are also called as Activity ratios or Asset management ratios. The turnover ratios shows how well the assets and the resources or utilized by company.
Sales to Inventory ratios
Reflects the Inventory management. Higher the inventory turnover ratio, the more efficient is the inventory management, low inventory management results in stock outs.
Inventory Turnover Ratio= Net Sales / Inventory
Receivables Turnover Ratio
The receivables to sales give a view of the receivables management. It shows the time taken by the firm to get the receivables.
Receivables Turnover Ratio= Net Sales / Receivables
Fixed Assets Turnover Ratio
Sales to fixed assets indicate the fixed asset utilization.
Fixed Assets Turnover Ratio= Net Sales / Fixed Assets
TOTAL Assets Turnover Ratio
This ratio measure the efficiency with which the assets of the company are employed and also the efficiency of the utilization of the assets. The higher the ratio the better the firm is. Sometimes, when the assets are old and deprecation is high, the ratio could be high which is not advisable.
Total Assets Turnover Ratio= Net Sales / Total Assets
3. MEASURE OF SOLVENCY:
Debt- to-equity Ratio
The investor are generally interested to find out the debt provides a measure of the company’s debts level. It is calculated by dividing total liabilities by shareholders equity. A debt of 1:2 or lower indicated that the company has relatively little debt.
Debt- to-equity Ratio= Total debt / Net worth
Interest Coverage Ratio
This shows how many times the operating income covers the interest payments. It measures the margin of safety the firm enjoys with respect to its interest burden. A high interest coverage ratio means that the firm can easily meet its interest burden.
Interest Coverage Ratio= Earnings before interest and taxes / Interest
4. MEASURE OF PROFITABILITY
Profitability ratios relate the firm’s profit with factor that generates the profits. The investor is very particular in knowing the net profit to sales, net profit to total assets and net profit to equity.
Net Profit Margin
This ratio measures the net profit per rupee of sales revenue.
Net Profit Margin= Profit after tax / Sales
Return to Assets
The return on assets measure the overall efficiency of capital invested in the business.
Return on Assets= Net income / Total Assets
Valuation Ratios
The share holders are interested in assessing the value of the shares. The value of shares depends on the performance of the firm and market factors. The performance of the firm depends on the host of factor.
Book Value per Share
This ratio indicated the share of equity share holders as per the company has paid all its liabilities, creditors, debenture, holders and preference share holders. At the time of liquidation, the shareholder can know what remains after making all the payments. In ordinary times also it helps to know the share holder to find out his real position in the company.
Book Value per Share= Equity share capital plus reserves / Total Number of shares outstanding
Dividend to Market Price
Dividend is the regular income received by the share holders. The share holders would like to know the relationship between the market price and dividend. Whenever the companies plough back their profits to settle the loans or for expansion program, the yield will be low, if the company distributes profits to shareholders the yield may be high which may not be proper indicator.
Dividend Yield= Dividend per share / Market price per share
Earnings per Share
Earnings per share are treated as best guide in investment decisions.
Earnings per share= Earnings after tax / Number of shares outstanding
Price/Earnings Ratio (P/E)
It is the more common yardstick of a company’s value. It is the current stock price divided by the earnings per share for the past year.
Price / Earnings ratio (P/E) = Market Price Per share / Earnings Per Share
Mc Kinsey’s Framework
Mc Kinsey’s 7S framework is very important from company analysis point of view. Mc Kinsey has suggested 7 ‘$’, which must fit together and make the strategy chosen by the company affectively implemented. The analyst has to examine how well the organization is able to integrate and implement the 7S which involve a number of interrelated choices and activities. There should be proper system for linking strategies with plan for implementation.
The 7S suggested by Mc Kinsey are:
1. Strategy
A Coherent set of actions aimed at gaining a sustainable advantage over competition, improving position vis-à-vis customers, or allocating resources.
2. Structure
The organization chart and accompanying baggage that show who reports to whom and how tasks are both divided up and integrated.
3. Systems
The processed and flows how an organization gets things done day to day.
4. Style
Tangible evidence of what management considers important by the way it collectively spends time and attention and uses symbolic behavior.
5. Staff
The people in an organization. Here it is very useful to think not about individual personalities but about corporate demographics.
6. Shared Values
The values that go beyond, but might well include, simple goal statements in determining corporate destiny. When most of the people share these values, the concept actually fits.
7. Skills
Skills are those capabilities that are possessed by an organization as a whole as opposed to the people in it.
The above mentioned 7S should be carefully examined by the analyst and he should also check how effectively each element helps in the implementation of the chosen strategy.
This analysis gives an overall picture of the firm’s efficiency and shows how all the above mentioned factors work hand in hand in an integrated manner to effectively and efficiently implement the chosen strategies and achieve the ultimate goals and objectives. Thus an intelligent analyst can put light on the 7S and predict how efficiently the strategies of the firm could be implemented. When the strategies of the firm are considered to be implemented in the effective and efficient manner, then investment in such firms is considered as well profitable.
THE ‘S’ CURVE APPROACH TO COMPANY ANALYSIS:
Most of the emerging companies undergo a typically lifecycle which resembles the ‘S’ Curve. There are four under ‘S’ curve of company. They are:
3
. 4 New ‘S’ Curve
Sales/ 2
Profits/ 1 Invest again
Dividends Invest 5
Time Period
Initial Phase
In the initial years of the company being set up, it faces lot of hard work to survive. The initial years are marketed by the following features:
• High level of uncertainty regarding markets and technology
• Slow rate of sales growth,
• Need for rapid changes in product design and manufacturing.
If the companies are able to withstand the pressures of the initial years, they slowly enter the second phase i.e., the Growth Phase
Growth Phase
The companies that able to bear the odds of the initial phase enter the second phase and grow rapidly capturing new markets, introducing new products and making investments. The distinct features of this phase are:
• Rising Demand
• Greater predictability in market demands and technology
• Entry of competition
Maturity Stage
After the growth phase, we can see the company starts to stabilize its operations. This phase is characterized by:
• Low market growth
• Relative stability in technology
• Intense competition,
• Imbalance in capacity related to business cycle.
Decline Stage
This is the last stage of the company and is characterized by the following features:
• Very low or negative industry returns
• Chronic over capacity
• Emergence of substitutes leads to a decline in sales volume.
At this stage of the company’s life there should be no person interested in investing in such companies.
Discontinuity Stage
Some firms before actually entering the decline stage, find certain discontinuities in the form of transferred ownership, new collaboration agreements, fresh funds invested in the company, new management take over’s etc.
SWOT Analysis:
The above-mentioned factors themselves would become strength, weakness, opportunities and threat (SWOT) for the industry. Hence, the investor should carry out a SWOT analysis for the chosen industry. Take for instance, increase in demand for the industry’s product becomes its strength, presence numerous players in the market, i.e. competition becomes the threat to a particular company in the respective industry. The progress in R&D in that particular industry is an opportunity and entry of multinationals in the industry and the cheap imports of the particular products are threat to that industry. In this way factors have to be arranged and analyzed.
General Steps to Fundamental Evaluation
Even though there is no one clear-cut method, a breakdown is presented below in the order an investor might proceed. This method employs a top-down approach that starts with the overall economy and then works down from industry groups to specific companies. As part of the analysis process, it is important to remember that all information is relative. Industry groups are compared against other industry groups and companies against other companies. Usually, companies are compared with others in the same group. For example, a telecom operator (Verizon) would be compared to another telecom operator (SBC Corp), not to an oil company (ChevronTexaco).
Economic Forecast
First and foremost in a top-down approach would be an overall evaluation of the general economy. The economy is like the tide and the various industry groups and individual companies are like boats. When the economy expands, most industry groups and companies benefit and grow. When the economy declines, most sectors and companies usually suffer. Many economists link economic expansion and contraction to the level of interest rates. Interest rates are seen as a leading indicator for the stock market as well. Below is a chart of the S&P 500 and the yield on the 10-year note over the last 30 years. Although not exact, a correlation between stock prices and interest rates can be seen. Once a scenario for the overall economy has been developed, an investor can break down the economy into its various industry groups.
Group Selection
If the prognosis is for an expanding economy, then certain groups are likely to benefit more than others. An investor can narrow the field to those groups that are best suited to benefit from the current or future economic environment. If most companies are expected to benefit from an expansion, then risk in equities would be relatively low and an aggressive growth-oriented strategy might be advisable. A growth strategy might involve the purchase of technology, biotech, semiconductor and cyclical stocks. If the economy is forecast to contract, an investor may opt for a more conservative strategy and seek out stable income-oriented companies. A defensive strategy might involve the purchase of consumer staples, utilities and energy-related stocks.
To assess a industry group's potential, an investor would want to consider the overall growth rate, market size, and importance to the economy. While the individual company is still important, its industry group is likely to exert just as much, or more, influence on the stock price. When stocks move, they usually move as groups; there are very few lone guns out there. Many times it is more important to be in the right industry than in the right stock! The chart below shows that relative performance of 5 sectors over a 7-month time frame. As the chart illustrates, being in the right sector can make all the difference.
Narrow Within the Group
Once the industry group is chosen, an investor would need to narrow the list of companies before proceeding to a more detailed analysis. Investors are usually interested in finding the leaders and the innovators within a group. The first task is to identify the current business and competitive environment within a group as well as the future trends. How do the companies rank according to market share, product position and competitive advantage? Who is the current leader and how will changes within the sector affect the current balance of power? What are the barriers to entry? Success depends on an edge, be it marketing, technology, market share or innovation. A comparative analysis of the competition within a sector will help identify those companies with an edge, and those most likely to keep it.
Company Analysis
With a shortlist of companies, an investor might analyze the resources and capabilities within each company to identify those companies that are capable of creating and maintaining a competitive advantage. The analysis could focus on selecting companies with a sensible business plan, solid management and sound financials.
Business Plan
The business plan, model or concept forms the bedrock upon which all else is built. If the plan, model or concepts stink, there is little hope for the business. For a new business, the questions may be these: Does its business make sense? Is it feasible? Is there a market? Can a profit be made? For an established business, the questions may be: Is the company's direction clearly defined? Is the company a leader in the market? Can the company maintain leadership?
Management
In order to execute a business plan, a company requires top-quality management. Investors might look at management to assess their capabilities, strengths and weaknesses. Even the best-laid plans in the most dynamic industries can go to waste with bad management (AMD in semiconductors). Alternatively, even strong management can make for extraordinary success in a mature industry (Alcoa in aluminum). Some of the questions to ask might include: How talented is the management team? Do they have a track record? How long have they worked together? Can management deliver on its promises? If management is a problem, it is sometimes best to move on.
Financial Analysis
The final step to this analysis process would be to take apart the financial statements and come up with a means of valuation. Below is a list of potential inputs into a financial analysis.
|Accounts Payable |Days Payable |Gross Profit Margin |Price/Sales |
|Accounts Receivable |Days Receivable |Growth |Product |
|Acid Ratio |Debt |Industry |Product Placement |
|Amortization |Debt Structure |Interest Cover |Regulations |
|Assets – Current |Debt:Equity Ratio |International |R & D |
|Assets – Fixed |Depreciation |Investment |Revenues |
|Book Value |Derivatives-Hedging |Liabilities – Current |Sector |
|Brand |Discounted Cash |Liabilities - Long-term |Stock Options |
|Business Cycle |Flow |Management |Strategy |
|Business Idea |Dividend |Market Growth |Subscriber Growth |
|Business Model |Dividend Cover |Market Share |Subscribers |
|Business Plan |Earnings |Net Profit Margin |Supplier |
|Capital Expenses |EBITDA |Pageview Growth |Relationships |
|Cash Flow |Economic Growth |Pageviews |Taxes |
|Cash on hand |Equity |Patents |Trademarks |
|Current Ratio |Equity Risk Premium |Price/Book Value | |
|Customer |Expenses |Price/Earnings | |
|Relationships |Good Will |PEG | |
The list can seem quite long and intimidating. However, after a while, an investor will learn what works best and develop a set of preferred analysis techniques. There are many different valuation metrics and much depends on the industry and stage of the economic cycle. A complete financial model can be built to forecast future revenues, expenses and profits or an investor can rely on the forecast of other analysts and apply various multiples to arrive at a valuation. Some of the more popular ratios are found by dividing the stock price by a key value driver.
|Ratio |Company Type |
|Price/Book Value |Oil |
|Price/Earnings |Retail |
|Price/Earnings/Growth |Networking |
|Price/Sales |B2B |
|Price/Subscribers |ISP or cable company |
|Price/Lines |Telecom |
|Price/Page views |Web site Biotech |
|Price/Promises | |
This methodology assumes that a company will sell at a specific multiple of its earnings, revenues or growth. An investor may rank companies based on these valuation ratios. Those at the high end may be considered overvalued, while those at the low end may constitute relatively good value.
Putting it All Together
After all is said and done, an investor will be left with a handful of companies that stand out from the pack. Over the course of the analysis process, an understanding will develop of which companies stand out as potential leaders and innovators. In addition, other companies would be considered laggards and unpredictable. The final step of the fundamental analysis process is to synthesize all data, analysis and understanding into actual picks.
Strengths of Fundamental Analysis
Long-term Trends
Fundamental analysis is good for long-term investments based on long-term trends, very long term. The ability to identify and predict long-term economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry groups or companies.
Value Spotting
Sound fundamental analysis will help identify companies that represent a good value. Some of the most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and John Neff are seen as the champions of value investing. Fundamental analysis can help uncover companies with valuable assets, a strong balance sheet, stable earnings, and staying power.
Business Acumen
One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such painstaking research and analysis, an investor will be familiar with the key revenue and profit drivers behind a company. Earnings and earnings expectations can be potent drivers of equity prices. Even some technicians will agree to that. A good understanding can help investors avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding the business, fundamental analysis allows investors to develop an understanding of the key value drivers and companies within an industry. A stock's price is heavily influenced by its industry group. By studying these groups, investors can better position themselves to identify opportunities that are high-risk (tech), low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer staples), cyclical (transportation) or income-oriented (high yield).
Knowing Who's Who
Stocks move as a group. By understanding a company's business, investors can better position themselves to categorize stocks within their relevant industry group. Business can change rapidly and with it the revenue mix of a company. This happened too many of the pure Internet retailers, which were not really Internet companies, but plain retailers. Knowing a company's business and being able to place it in a group can make a huge difference in relative valuations.
Weaknesses of Fundamental Analysis
Time Constraints
Fundamental analysis may offer excellent insights, but it can be extraordinarily time-consuming. Time-consuming models often produce valuations that are contradictory to the current price prevailing on Wall Street. When this happens, the analyst basically claims that the whole street has got it wrong. This is not to say that there are not misunderstood companies out there, but it is quite brash to imply that the market price, and hence Wall Street, is wrong.
Industry/Company Specific
Valuation techniques vary depending on the industry group and specifics of each company. For this reason, a different technique and model is required for different industries and different companies. This can get quite time-consuming, which can limit the amount of research that can be performed. A subscription-based model may work great for an Internet Service Provider (ISP), but is not likely to be the best model to value an oil company.
Subjectivity
Fair value is based on assumptions. Any changes to growth or multiplier assumptions can greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and use sensitivity analysis to present a base-case valuation, an average-case valuation and a worst-case valuation. However, even on a worst-case valuation, most models are almost always bullish, the only question is how much so. The chart below shows how stubbornly bullish many fundamental analysts can be.
Analyst Bias
The majority of the information that goes into the analysis comes from the company itself. Companies employ investor relations managers specifically to handle the analyst community and release information. As Mark Twain said, "there are lies, damn lies, and statistics." When it comes to massaging the data or spinning the announcement, CFOs and investor relations managers are professionals. Only buy-side analysts tend to venture past the company statistics. Buy-side analysts work for mutual funds and money managers. They read the reports written by the sell-side analysts who work for the big brokers (CIBC, Merrill Lynch, Robertson Stephens, CS First Boston, Paine Weber, DLJ to name a few). These brokers are also involved in underwriting and investment banking for the companies. Even though there are restrictions in place to prevent a conflict of interest, brokers have an ongoing relationship with the company under analysis. When reading these reports, it is important to take into consideration any biases a sell-side analyst may have. The buy-side analyst, on the other hand, is analyzing the company purely from an investment standpoint for a portfolio manager. If there is a relationship with the company, it is usually on different terms. In some cases this may be as a large shareholder.
Definition of Fair Value
When market valuations extend beyond historical norms, there is pressure to adjust growth and multiplier assumptions to compensate. If Wall Street values a stock at 50 times earnings and the current assumption is 30 times, the analyst would be pressured to revise this assumption higher. There is an old Wall Street adage: the value of any asset (stock) is only what someone is willing to pay for it (current price). Just as stock prices fluctuate, so too do growth and multiplier assumptions. Are we to believe Wall Street and the stock price or the analyst and market assumptions?
Criticisms
Fundamental analysis is a method used to determine the value of a stock by analyzing the financial data that is 'fundamental' to the company. That means that fundamental analysis takes into consideration only those variables that are directly related to the company itself, such as its earnings, its dividends, and its sales. Fundamental analysis does not look at the overall state of the market nor does it include behavioral variables in its methodology. Critics of fundamental analysis often charge that the practice is either irrelevant or that it is inherently flawed.
In other words, they argue that it is impossible to learn anything new about a company by analyzing its fundamentals that the market as a whole does not already know, since everyone has access to the same financial information. The other major argument against fundamental analysis is more practical than theoretical.
However, such critics are in the minority. Most individual investors and investment professionals believe that fundamental analysis is useful, either alone or in combination with other techniques.
The factors to be consider while selection of company.
|Factors Consider for selection of company |No Of Respondents |Percentage |
|Fundamental Analysis |86 |43 |
|Technical Analysis |44 |22 |
|Both |20 |10 |
|Speculation |50 |25 |
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INTERPRETATION
From the above graph & Pie chart it is represents that 48% of the people take the help of fundamental analysis and 22% of the people take the help of technical analysis by which the risk can be calculated and profit can be maximize. However, even that 25% of people invest in the basis of speculation which is risky. 10% are people invest means both (i.e fundamental analysis and technical analysis) by which prediction can be good if people invest money on the basis of analysis then the risk can be minimize and profit can be maximized.
COMPANY PROFILE
Abacus Service Corporation
Abacus Service Corporation provides agile, innovative, comprehensive workforce solutions that assist their clients in aligning their human capital strategy with their business goals. Abacus Service Corporation provides a full portfolio of workforce solutions that includes Staffing and Recruiting Solutions, Managed Services, Customized Staffing Modules, and Outsourcing Solutions.
Their ability to provide exceptional services while achieving the client’s organizational goals has facilitated their growth and enabled them to be a chosen partner of human resource solutions. They understand surpassing their client’s expectations enables clients to remain competitive today and viable as a partner in the future.
Abacus Service Corporation is a full service employment solutions firm designed around the ability to provide agile contingent workforce solutions. Formed in 2004 by industry veterans, Abacus Service Corporation implemented guiding principles with best in industry processes and innovative technologies, to form an influential force in employment solutions. Abacus Service Corporation was founded in Farmington Hills, Michigan and has grown to become a nationwide presence with offices in 16 locations and two international offices. Through their locations, Abacus has been able to offer their clients cost effective and quality employment solutions regardless of the geographic coverage based on their successful strategies. Abacus is a privately held company with employees in 27 U.S. states and four Canadian Provinces. Abacus is MBE and WBE certified nationally and upholds their commitment to diversity by adhering to a philosophy of recruiting employees from diverse backgrounds. Their extensive experience, passion to deliver the best in class solutions, and dedication to customer service has allowed Abacus to become the workforce ally of their clientele.
Abacus is dedicated in understanding the needs of their clients. A key to their communication is their consultative approach. their team collaborates with your team to clearly identify its specific needs, whether those needs define a new system, product development, or an ongoing business process. Understanding their client’s goals is the first step in their solution assessment process. The team seeks to understand your business objectives in order to align their program goals with your business objectives. They construct quality embedded procedures in their solution methodology to provide your organization with the best solution. By successfully achieving their client’s expectations, we enable their clients to remain competitive today and viable as a partner in the future.
By combining high skilled individuals from various talent backgrounds, Abacus has evolved to form a comprehensive team capable of delivering a wide breadth of employment solutions. The Abacus solution portfolio includes Staffing and Recruiting Solutions, Managed Services, Customized Staffing Modules, and Outsourcing Solutions. Abacus Staffing and Recruiting Solutions fulfill contract, permanent placement, and transitional workers. Their diverse team has the experience to provide employment solutions for all forms of talent. The Abacus recruiting strategy focuses on Engineering, Information Technology, Scientific, Finance and Accounting, Professional, Support Services personnel. Abacus clients are found in every industry, including Technology, Semiconductor, Pharmaceutical, Automotive, Government, Defense, Aerospace, and Manufacturing. Abacus Managed Services enable companies to optimize their workforce and control spends. Abacus Customized Staffing Modules permits companies to create an ideal blend of employment solutions for their company.
The entire Abacus team is dedicated to delivering “The Right Solution” to their clients. their ability to provide exceptional service while meeting their clients’ goals has enabled us to be a chosen supplier in the marketplace.
Managed Services
Managed Service Program
Abacus' comprehensive approach to Managed Service Programs (MSPs) enables us to improve the quality and efficiency of their clients' recruiting process. Their team conducts an assessment of your contingent workforce business goals and collaborates with your organization to determine a customized solution. Abacus MSP serves as a central point of accountability for staffing processes across your total organization. Central management allows for workflow visibility, quantitative/qualitative data, and compliance coverage. The Abacus MSP services deliver performance management, process improvements, and cost savings methodologies of contingent labor workforce management. Abacus managed services improve supply chain efficiency resulting in savings of 20%. Abacus is financially stable, ensuring services without interruption.
VMS
Vendor Management Software (VMS) streamlines and automates the processes that support contingent workforce management. their client's organizational goals must be determined and then the VMS system fit to their needs. The technology-enabled portion of their managed service offering allows companies to have web- based order distribution, consolidated billing, and enhancements in management reporting tools. The VMS system can facilitate the interview and hiring process, as well as act as a labor management tool. VMS solutions can track time cards, hours worked, fixed fee projects, and milestone billings. Abacus vendor management software solutions allow cross organizational access and streamline vendor control. VMS software is paramount for an effective MSP program.
Vendor Neutrality
The Abacus Managed Services Program will manage your staffing suppliers and measure their effectiveness in recruiting according to their client's standards. Abacus delivers measurable results in cost control, quality, and productivity. As a core function of their managed services, we adhere to a vendor neutral program. Vendor neutrality ensures all vendors are competing on equal ground. It is in the best interest of all program partners that Abacus only fulfills the managed services role when providing MSP services. As part of their MSP, all processes are transparent to ensure program integrity. The concept of providing fair, objective and impartial management services to their clients is their expectation.
Abacus Vendor Neutrality Practices include
• Systematic Requisition Distribution
• Management involvement in candidate evaluation
• Implementing system functionality to support vendor neutrality
• Supplier performance metrics.
Flexible Options
Clients can choose from their complete MSP or utilize Abacus to fulfill a particular role. Abacus managed services can integrate their chosen VMS or utilize the VMS chosen by their client. Abacus has worked with most of the nation's leading vendor software solutions, and they can effortlessly integrate their management programs.
Key Benefits
Significant Reduction in Overall Costs
• Reduce overall contingent workforce costs
• Centralized management
• Pay rate competition, filling positions at a lower cost
• Eliminate inconsistencies in pay/bill rates with performance standards
• Creation of measurements and metrics for total contingent workforce spend
Improved Organizational Efficiency
• Free HR and Management from daily transaction processes, reducing administrative burden.
• Reductions in requisition fill time
• Consolidated billing from staffing suppliers
• Consolidated invoicing, supplier payment and program reporting
• A centralized, standardized hiring process
• Supply chain optimization
• Vendor neutrality
Centralized Recording Systems
• Traceable transactions
• Single source for background checks, drug screening and EEOC reporting
• Compliance assurance
• Single source of accountability to manage all contracts, insurance and certificates
Technology Enabled Software Support
• Web-based requisitions and timekeeping
• Enterprise visibility and access to online management reports
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Circle of Excellence
The below ideals and values constitute "The Circle of Excellence" that every Abacus employee abides by. This excellence symbolizes the efficiency of the work style Abacus follows.
Values
Diversity
Abacus values equal opportunity, respect to all, and is committed to fair treatment. They believe that diversity results in stronger community bonds, growth in the field, and elite client satisfaction. Abacus is committed to receive and deliver services from supplier programs whom recognize diverse groups.
Corporate Citizenship
As a national company, it is essential to utilize their skills to support communities in becoming a better place to live and work. They follow ethical, lawful business processes and maintain a social responsibility plan. We believe in doing business the responsible way.
Leadership
They believe in creating leaders while inspiring their staff to be world leaders in the solutions they offer. Employees exhibit their organizational values and ethics in their service delivery. Abacus strives to foster teamwork, fulfill commitments, perform passionately, and become the marketplace leader.
Commitment to Long Term Partnerships
Abacus values the relationships that are formed through clients, partners, suppliers, and business associates. They create and maintain a sustainable long-term profit for all stakeholders. They believe that communicating and understanding the needs that are requested displays a partnership role, which can build into a long-term relationship.
Integrity
Abacus employees are held to high moral standards and are held accountable for following organizational principles. They believe in building trusting relationships based on honest facts with all involved in their services. They regard all stakeholders with professional respect and professionalism.
Innovation
Our approach to solving their clients’ needs is based on their core operating philosophy and their fundamental implicit assumption on strategy. While adhering to their fundamental procedures based on industry knowledge, Abacus also seeks disruptive innovation to create a competitive advantage in the marketplace. They seek to create an intentional, repeatable process which generates a significant difference in the value being delivered to their clients.
Service Promise
Quality
At the core of their service offering, is quality. their services are focused on meeting and exceeding their client’s standards, guidelines, and expectations. Quality is determined on the specific, measurable results of the end solution provided to their client. The quality of their professional service is based off of experience, training and passion to deliver world class solutions.
Client Satisfaction
Abacus is committed to the standard of 100% satisfaction for their clientele. Strong communication, with an emphasis on open communication, resolution, and feedback is the basis of their success.
Cost Effectiveness
Abacus services characteristically deliver substantial savings when compared to other national firms. One of Abacus' most established Fortune 500 clients shared that they achieved a savings of $1.1 million in the three years of service that they provided them. This savings was in comparison to the services that they received from their previous supplier. their operational processes result in significant cost reductions for their clients.
Social Responsibility
Abacus Service Corporation places a high emphasis on the interest of their stakeholders, the need for community involvement, their responsibility as a diverse company, and their
Community Involvement
As a company, they have a fundamental responsibility to support their local communities. Building a successful business model and relationships are wonderful, but to be a great business, they must utilize their intelligence to have a beneficial impact on society. Abacus is committed to contributing to charitable causes and encourages staff to become involved as well. As they continue to grow, they continue to contribute and engage their employees to help by not only donating themselves, but also by having various contests and awards with donations going to employee selected causes. Internal Abacus employees are granted paid time off to assist with local organizations of their choice. Abacus has donated to the Haiti disaster fund, American Red Cross, Portland Food Bank, several other regional organizations.
Diversity Statement
Abacus, a minority and woman owned business, is a pioneer in the staffing industry. they are devoted to creating and maintaining a diverse climate for their internal and external teams. Abacus acknowledges and respects all forms of diversities such as race, ethnicity, national origin, gender, sexual orientation, religion, age, and ability. They believe that any attempt to oppress any individual or group is a threat to their company’s integrity. Abacus is guided by the moral responsibility of zero tolerance of any form of bigotry, harassment, intimidation, threat or abuse, whether verbal or written, physical or =psychological, direct, or implied. Abacus values equal opportunity, respect to all, and is committed to fair treatment.
A diverse workforce creates a broad depth of workforce experience, skills, market knowledge, and perspectives. Abacus maintains internal diversity goals and supports the diversity initiatives of their clients. They believe diversity policies create stronger community bonds, growth in the field, and elite client satisfaction. As part of their supplier diversity program, Abacus is committed to receive and deliver services from supplier programs that recognize diverse groups.
Abacus' Green Initiatives
Abacus believes that doing business the right way includes embedding a green initiative into their corporate philosophy. As members of various communities, they know that society, the environment, and the economy are interconnected. It makes sense to pay attention to the environmental impact of their economic practices to ensure their communities are healthy and pleasant. They have found that operating a green business is beneficial for the environment and provides cost savings. their green initiatives have allowed us to conserve resources and cut down on waste.
Abacus' Green Initiatives consist of the following practices
Waste Reduction
Reduce paper waste in the following ways:
Our recruiters never print a Job Order or resume, they work exclusively with electronic copies of all documents.
Abacus utilizes a Collaborative Software which ensures almost all of their operations are electronic and virtual. Job details are able to be virtually shared and worked on in a collaborative online environment.
We utilize an online employee website, this allows them check their paystubs, benefits, 401(k), etc. Abacus utilizes 100% recycled paper.
The use of fax software allows us Abacus to save thousands of pages of material a year. Printer and copier defaults are set to two-sided.
We minimize the use of envelopes in distribution of marketing materials. Reuse single-sided pages as scratch paper
Energy Conservation
The use of compact fluorescent light bulbs. Lights with motion detectors or timers are utilized to allow energy to be used only when a presence is detected.
When feasible, we take advantage of working under natural light. At the end of each day and night, all office equipment and lights are diminished until the next working day.
Disconnect unnecessary equipment completely. Such as; unplugging cell phone chargers when not in use.
In the summer, we lower air-conditioning use by utilizing blinds, shades, or tinted windows.
Recycling
Abacus makes a good faith effort to recycle paper, glass, plastic, cardboard, toner and inkjet cartridges, and other recyclable materials.
Abacus locations have labeled recycling bins with detailed instructions, such as: remove caps, flattening containers, breakdown cardboard boxes, bundle newspapers, etc.
Transportation
When possible, Abacus uses teleconferences or web conferences rather than traveling.
Abacus plans to include incentives for employees who use public transportation, carpool, or ride their bikes to work in the near future.
Abacus is proud to partner with companies that also feature green initiatives.
Staffing and Recruiting Options
Our recruiting and staffing solutions fulfill contract, permanent, and transitional roles for their clientele. Their services have been utilized by organizations seeking to add supplemental support for project based work or to add a specialty skill to fill a niche of expertise. Abacus has also placed high level permanent positions.
Engagement Options
• Contract
• Permanent Placement
• Transitional
By Talent
Our diverse team has the experience to provide employment solutions for all forms of talent. Recruiters are thoroughly trained and are experts in their area of specialization.
• Engineering
• Information Technology
• Finance and Accounting
• Scientific
• Professional
• Office Support
By Industry
Although their employment solutions suit various industries, upon entering an engagement with a partner, their team conducts an Industry analysis to gain acumen. The additional insight enables their team to understand industry fundamentals, trends, regulatory environments, and the talent channels. Knowing your industry enables Abacus to match your organization with the best solutions available.
• Energy and Utilities
• Life Science
• Defense and Aerospace
• Technology Companies
• Government Solutions
• Finance and Insurance
• Consumer Goods
Abacus Onsite Management solutions provides onsite, dedicated personnel to support the responsibilities associated with contract employees. Onsite teams can maintain a local office near the client's vicinity or within the client's building. Onsite teams are formed to assist with service delivery by providing immediate accessibility required for exceptional communication.
Onsite teams can include the following roles to complete each necessary task:
• Administrative Staff
• Accounting/Payroll staff
• Program Manager
• Employee Relations Representative
• Recruiter(s)
• Resource Manager
Pay rolling Services
Abacus offers the convenience of payroll services. This service is handled by expert payroll specialists. Payroll specialists ensure employees are receiving accurate weekly paychecks. Abacus maintains the responsibility of complying with all government agency reports, paying the necessary taxes and maintaining proper insurance.
Our payroll services consist of the following
The distribution and verification of all employee documents:
W-4 Tax Form and I-9 Tax Form
Once the forms are completed, Abacus verifies the forms for accuracy.
Direct Deposit Form
Employees have the option to automatically deposit paychecks into their account. To ensure that their paycheck will be deposited safely into their account, employees are required to submit a voided personal check that has been voided along with the form to ensure that the accurate account number is provided.
Accurate Information - To ensure that the accurate information is being submitted on the timecard, their payroll specialists will verify the information.
Paycheck Processing - Checks are processed on the weekly scheduled pay date. Their team ensures time cards are delivered in a timely matter. To ensure that the paychecks are delivered without interruption, their team carefully instructs the importance to deliver all timecards in a timely manner.
Paycheck Distribution - Paychecks are distributed according to the employee’s delivery request. In most cases, the paychecks are deposited automatically in their checking or savings account. For those that opt out of this service, we ensure prompt delivery to the location requested by the employee.
Year-end 1099 Statements - Year-end 1099 statements are distributed to all employees in an accurate and timely manner.
We assist with pay rolling for all employees, regardless of the length of the assignment. Their payroll service is convenient and cost effective to their clients. They pride their selves on delivering accurate results to employees and their clients.
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Attracting the Best Talent
Abacus attracts the best talent with an effective talent pipeline system. their proficient talent pipeline blends recruiting channels, organizational programs, and internal processes to attract a dynamic mix of potential candidates. They recognize that by continually changing their talent channels, they can discover a wide mixture of resources. Abacus programs integrate a referral network, retention of contract talent, competitive compensation packages, exposure through publicity, and ensure satisfied employees. The selection process empowers their recruiters to understand the competencies and characteristics that their clients seek, resulting in the selection of the right person from their talent pipeline. The goal of their talent pipeline system is to attract, select, place, and retain a consistent supply of talent to fulfill all of their client’s roles. Abacus has the RIGHT PERSON, RIGHT NOW.
Channels
We network extensively and gather referrals from industry professionals within organizations similar to that of their clients.
Targeted and broad-based talent pool.
Active involvement in Associations and Trade Groups.
Programs
The Abacus retention program elevates retention levels by ensuring employee morale is kept high. Retention strategies include commensurate compensation packages, recognition awards, career development programs, open communication lines, and bonuses. By ensuring morale is kept high, employees are fully engaged at the task at hand.
To retain employees, Abacus is committed to a culture of respect and open communication. Strong communication, including an emphasis on listening and understanding, is a foundation for preventing problems. Frequent communication between the Abacus staff and the employees, as well as the Abacus staff and their clients hiring manger, is important to addressing and resolving performance issues. Abacus maintains an open door policy with all organizational stakeholders.
Referral Program
Commensurate benefit package geared towards today’s professionals.
As per the performance of the existing employees candidates provide their candidates to put them on our payroll
Benefits
Internal marketing and publicity programs geared towards driving candidates to Abacus.
Processes
Recruiting approach that is strives for quality by fully understanding the job requirements and nuances of the discipline.
Proactive and reactive recruiting of passive employed, active employed, and active unemployed.
Specialized recruiters provide additional industry and talent insight. Recruiters seek feedback loops to request additional information from the manager to refine searches.
We utilize a state-of-the-art computerized database to track all of their potential, current and former employees. The database contains thousands of candidates. Employees are screened using efficient and detailed employee hiring verification services.
• Reference Checks
• Background Checks
• Drug Screens
• Skill Verification Checks.
CHAPTER-III
REVIEW
OF
LITERATURE
INTRODUCTION TO FUNDAMENTAL ANALYSIS AND
ITS ADMINISTRATIVE FRAME WORK
Fundamental analysis is the cornerstone of investing. In fact, some would say that you aren't really investing if you aren't performing fundamental analysis. Because the subject is so broad, however, it's tough to know where to start. There are an endless number of investment strategies that are very different from each other, yet almost all use the fundamentals.
The goal of this tutorial is to provide a foundation for understanding fundamental analysis. It's geared primarily at new investors who don't know a balance sheet from an income statement. While you may not be a "stock-picker extraordinaire" by the end of this tutorial, you will have a much more solid grasp of the language and concepts behind security analysis and be able to use this to further your knowledge in other areas without feeling totally lost.
The biggest part of fundamental analysis involves delving into the financial statements. Also known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and all the other financial aspects of a company. Fundamental analysts look at this information to gain insight on a company's future performance. A good part of this tutorial will be spent learning about the balance sheet, income statement, cash flow statement and how they all fit together.
But there is more than just number crunching when it comes to analyzing a company. This is where qualitative analysis comes in - the breakdown of all the intangible, difficult-to-measure aspects of a company.
Fundamental analysis is the examination of the underlying forces that affect the well being of the company, industry groups and companies. As with most analysis the goal is to develop a forecast of future price movement and profit from it. At the company level, fundamental analysis may involve examination of financial data, management , business concept and competition. At the industry level their might be an examination of supply and demand forces of the products. For the national economy fundamental analysis might focus on economic data to asses the present and future growth of the economy.
Fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value by examining related economy, financial and other qualitative and quantitative factors. Fundamental analysis attempt to study everything that can affect the Securities value including macro economic factors and individual specific factors.
Three phase of the fundamental analysis:
A. Understanding of the Macro Economic environment and developments (Economy analysis)
B. Analyzing the prospectus of the industry to which the firm belongs(Industry analysis)
C. Assessing the projected performance of the company( Company analysis)
ECONOMY ANALYSIS
The purpose of analyze economic condition of the country in fundamental analysis to asses the general economic situation both within the country and inter nationally.
The economy is like the tide and the various industry groups and individual companies are like boats. When economy expands most industry groups and companies benefits and grows. When the economy decline, most sectors and companies usually suffer. The stock market does not operate in a vacuum it is an integral part of the whole economy of a country, more so in a free economy that of United States and to some extent in mixed economy like ours
FINANCIAL TERMS
1. ADR: American Depository Receipt. It is an instrument traded at U.S. exchanges a fixed number of shares of a foreign company that is traded in the foreign country. The ADR route enables companies to raise funds in the U.S. financial markets.
2. Asset Management Company ( AMC ): A company set up for floating and managing schemes of a Mutual Fund.
3. Balance of payments: A statement that contains details of all the economic transactions of a country with the rest of the world, for a given time period, usually one year. The statement has two parts: the Current Account & the Capital Account.
4. Bond: A long term debt instrument on which the issuer pays interest periodically, known as ‘Coupon’. Bonds are secured by COLLATERAL in the form of immovable property. While generally, bonds have a definite MATURITY,.
5. Book Value: It is the amount of NET ASSETS that would be available per EQUITY SHARE, after a company pays off all LIABILITIES including PREFERENCE SHARES from the sale of proceeds of all its ASSETS liquidated at BALANCE SHEET values.
6. Budget: A financial plan that projects receipts and payments of an entity covering a specific period of time, usually one year. Its primary purpose is to achieve financial control. Budgets could be distinguished on the basis of time span, function and flexibility.
7. Call Money: A term used for funds borrowed and lent by banks for overnight use. This is a market which banks access in shortfall in funds and the interest rate is determined by supply and demand conditions.
8. Cash Reserve Ratio ( CRR ) : A legal obligation on all Scheduled Commercial Banks excluding Regional rural Banks to maintain certain reserves ion the form of cash with Reserve Bank of India. The reserves, to be maintained over a fortnight, are computed as a percentage of a bank’s net demand and time liabilities.
9. Central Bank: The premier bank in a country that discharges.
Fundamentals Analysis Framework
• In what ways can we compare algorithms?
• Time & Space efficiency are most common.
• Others: Cost, Power …
• Characteristics of a good framework
• Independence from
• Programmer implementation
• Language / compiler optimizations
• Architecture *
• Dependence on
• Input encoding
• Critical operation of algorithm
• Frequency of critical operation execution
• Number of “things” stored in memory relative to input encoding
Input Size
• Goal:
• Express efficiency of an algorithm relative to the size of its encoded input.
• We shall assume that all input to our algorithms is encoded efficiently.
• Example, integers will typically be encoded in binary, which implies the following:
[pic]
Measuring Running Time
• Basic Operation
• The operation contributing the most to total runtime
• Frequency of execution depends on input
Let c_op be the execution time of an algorithms basic operation on a particular computer, and let C(n) be the number of times this operation is run on input n, then we can estimate the running time T(n) of a program:
T(n) ¼ cop C(n)
Basic Operation
• What is the basic operation for:
• Given some set, S = { i1, i2, … in } of unordered integers, find the minimum
• Given two integers, a and b, find their sum, a + b
• Given a set, S = { i1, i2, … in } and a, such that for all ik and a are all integers, determine whether S contains a.
Unit Free Comparisons
• Goal:
• Independence from architecture, implementation…
• Suppose we observe that some algorithm, A, makes C(n) basic operations for an input of size n, where C(n) is:
[pic]
Suppose that each operation requires c0 time T(n) ¼ c0 C(n). How much longer would the algorithm require for 2 times its input i.e: T(2n) ¼ ? Remember the speed-up formula?
CHAPTER-IV
DATA ANALYSIS
&
INTERPRETATION
FINANCIAL STATEMENT ANALYSIS
The term financial analysis also known as analysis and interpretation of financial statements, refers to the process of determining financial strength and weakness of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data. Analyzing financial statements.
Financial analysis is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firms position and performance by Meyers the purpose of analysis is to diagnose the information contain in financial statement so as to judge the profitability and financial soundness of the firm. Just like a doctor examine his patient by recording his body temperature, blood pressure. Before making his conclusion regarding the illness and before giving his treatment.
A financial analyst analysis the financial statements with various tools of analysis before commenting upon the financial health or weakness of an enterprise. The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statement
Financial statement analysis is an attempt to determine the significance and meaning of the financial statement data so that forecast may be made of the future earnings ability to pay interest and debts maturities (both current and long term) and profitability of a sound divided pollution.
METHODS OF FINANCIAL ANALYSIS
The following methods of analysis are greatly used:-
Comparative statement
Trend analysis
Common size statement
Funds flow statement
• Cash analysis
• Ratio analysis
• Cost volume profit analysis
COMPARATIVE STATEMENT
The comparative financial statements are statements of financial position at different periods of time. The elements of financial position are show in a comparative statement provides an idea of financial position at two or more periods. Generally two financial statements (balance sheet and income statement) are prepared in comparative form for financial analysis.
THE COMPARATIVE STATEMENT MAY SHOW
• Absolute figures (rupee amounts)
• Changes in absolute figures i.e. increase or decrease in absolute figures.
• Absolute data in terms of percentages.
• Increase or decrease in terms of percentages.
THE TWO COMPARATIVE STATEMENTS ARE
Comparative balance sheet and
Income statement
COMPARATIVE BALANCE SHEET
The comparative balance sheet is the study of the trend of the same items, group of items and computed items in two or more balance sheet of the same business enterprise on different dates.
The change in periodic balance sheet items reflect the conduct of a business the change can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise.
Guidelines For Interpretation Of Comparative Balance Sheet While interpreting comparative balance sheet the interpreter is expected to study the following aspect:-
• Current financial position and liquidity position
• Long term financial position
• Portability of the concern
COMMON SIZE BALANCE SHEET
The common size statements, balance sheet and income statement are shown as a percentage of the total similarly, various liabilities are taken as a part of total liabilities.
A statement in which balance sheet items are expressed as the ratio of each assets to total Liabilities is called common size balance sheet.
The comparative balance sheet is used to compare companies of different size of different Periods is not useful because total figures may be affected by a number of factors.
TREND ANALYSIS OF BALANCESHEET
Trend analysis is very important tool of horizontal financial analysis. This analysis enables to known the changes in the financial function an operating efficiency in between the time period chosen. By studying the trend analysis of each item we can known the direction of changes and based upon the direction of changes, the option can be changed.
Trend = Absolute Value of items in the statement understudy / Absolute Values of same item in the base statement * 100
APPRAISAL OF WORKING CAPITAL PERFORMANCE
THROUGH RATIO ANALYSIS:-
Ratio analysis is used as a technique of analyzing the financial information, contained in the balance sheet and profit and loss accounts, for a more meaningful understanding of the financial position and performance of a firm.
The relationship between the two accounting figures, expressed mathematically, is known as a financial Ratio. A ratio helps the analyst to make qualitative judgenebt about the firm’s financial position and performance.
Several ratios can be calculated from the accounting data contained in the financial statements. The parties which generally undertake financial analysis is short term creditors, long term creditors Owner and management. In view of the requirement of the various users of ratios, ratios are classified into the following four important categories.
• Liquidity ratio
• Leverage Ratio
• Activity ratio
• Profitability Ratio
LIQUIDITY RATIO
It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity ratios measure the ability of the firm to meet is current obligations. A firm should that it does suffer from lack of sufficient liquidity, and also it does not have excess liquidity.
The failure of accompany to meet its obligations due to lack of sufficient liquidity, will result in a poor Credit worthless, loss of creditors, confidence or even in legal tangles resulting in the closure of company.
A very high degree of liquidity is also bad ; idle assets earn nothing. The firm’s fund will be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance high liquidity and high liquidity.
The most common ratios which indicate the extent of liquidity or lack of irate;
1. Current ratio
2. Quick ratio
Other ratios include cash ratio, interval measure and net working capital ratio.
CURRENT RATIO
The current ratio is calculating by dividing current assets by current liabilities. Current ratio is the measure of the firm’s short term solvency it indicates the availability of current assets in rupees for every one rupee of current liability a ratio of greater than one means that the firm has more current assets than current claim’s against the ,current ratio of 2 to 1 or more is consider satisfactory . Current ratio represents margin of safety for creditors.
Current ratio = Current Assets / Current Liabilities
QUICK RATIO
Quick ratio is also known as acid test ratio establishes a relationship between Quick assets and the current liabilities. Cash is the most liquid asset. It is calculated by dividing quick asset by current liability.
Quick Ratio = Quick asset / Current liabilities
Where (Quick asset= current asset- inventory)
One defect of the current ratio is that it fails to convey any information on the composition of the current assets of the firm. A rupee of cash is considered equivalent to a rupee of inventory of receivables. But it is not so A rupee of cash is more readly available to meet current liabilities then a rupee of say inventory. This implies the usefulness of the current ratio.
The acid test ratio measures the firm’s ability to convert its current assets quickly into cash in order to meets its current liabilities.
A quick ratio of 1 to 1 is consider to represent a satisfactory current financial condition. It is an important index of the firms liquidity.
LEVERAGE RATIO
Leverage ratios identify the source of firm’s capital owners or Outside creditors. Financial leverage refers to the use of debt in financing non-current assets. If the return on assets exceeds the Cost of debt, the leverage is i.e. it improves the return on equity
DEBT-EQUITY RATIO
The debt-equity determines to analyses the soundness of the long term financial policies of the organization. It is also known as “Internal External equity ratio”.
Its calculate das follows.
Debt- equity ratio = Total long term debt / Share holders fund
ACTIVITY RATIOS
They are primarily used for studying a firm’s working capital situation. A well managed firm should have good active ratios.
WORKING CAPITAL TURN OVER RATIOS
The working capital turnover ratio indicates whether or not working capital has been effectively used in making sales.
Working capital turn over = Net Sales / Net working capital
PROFITABILITY RATIOS
Profitability ratios are the ratios which measures a firm’s overall Effectiveness as revealed by the return’s generators on sales and Investment.
NET PROFIT RATIO
Net profit ratio indicates net margin on sales. It is given by the following equation.
Net profit ratio = Net profit / Sales * 100
WORKING CAPITAL TURN OVER RATIOS
|Particulars |FY 2009 |FY 2010 |FY 2011 |
|Net Profit |19,49,856.60 |29,05,128.56 |32,03,027.92 |
|Sales |95,38,754.75 |1,52,08,703.65 |1,81,49,450.89 |
| | | | |
|Ratio |4.89 |5.23 |5.66 |
[pic]
In the above sales Analysis we can see the ratio of the sales has been increased from the YR 2009 – YR 2011. The higher total sales volume ratio is the most efficient measure in terms of utilization of asset and reflects the better utilization of the firm’s fund. Low total sales volume indicates the presence of idle capacity
Gross Profit Margin
Gross Profit Margin = Gross Profit / Turnover * 100
Turnover = Sales
Gross Profit = Turnover - Cost of Sales
The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost of goods sold. It is a very simple idea and it tells us how much gross profit per £1 of turnover our business is earning.
Gross profit is the profit we earn before we take off any administration costs, selling costs and so on. So we should have a much higher gross profit margin than net profit margin.
[pic]
The gross profit derived from few clients of the company for the month December Where in the above diagram you can find clients ACS and Intel Corporation is covering huge profits of the company where as the clients Entergy and Duke is generating very low volume of revenues for the company. Volkswagen and Johnson & Johnson can improve and can extract the good sales volume in future.
SALES ANALYSIS
The absolute amount of sales of the firm firstly indicates its size. Size has implications for purchasing and selling power, amount of market share and economics of scale, through sales analysis, a business will become familiar with emerging trends in the marketplace. When sales fluctuate, it implies new trends manifesting that a company needs to master to keep sales on par with those of the competition. A company needs to know which products competitors are selling more of to draw its own strategy. Sales analysis helps the company know it is meeting its sales objectives in a given timeframe.
SALES STATEMENT FOR PAST THREE YEARS:
|PARTICULARS |FY 2010 |FY 2011 | FY 2012 |
|JANUARY |7,68,660.51 |8,79,753.90 |9,98,134.69 |
|FEBRUARY |6,27,037.85 |8,71,407.55 |15,64,798.55 |
|MARCH |6,62,604.83 |10,20,251.65 |15,84,426.35 |
|APRIL |8,66,015.68 |14,17,867.13 |15,99,228.19 |
|MAY |7,50,049.05 |11,42,868.11 |13,72,928.10 |
|JUNE |6,60,127.18 |10,68,816.64 |12,98,810.06 |
|JULY |7,92,706.22 |13,43,172.20 |14,99,272.20 |
|AUGUST |7,15,419.52 |11,94,093.86 |12,98,593.26 |
|SEPTEMBER |11,27,267.23 |16,56,028.41 |17,86,026.11 |
|OCTOBER |9,75,735.07 |15,20,484.86 |17,98,484.06 |
|NOVEMBER |8,05,675.78 |14,63,365.87 |15,62,985.88 |
|DECEMBER |7,87,455.83 |16,30,593.47 |17,85,763.44 |
|SALES |95,38,754.75 |1,52,08,703.65 |1,81,49,450.89 |
|AVG |9.5 |15.2 |18.10 |
[pic]
INTERPRETATION
In the above sales Analysis we can see the ratio of the sales has been increased from the YR 2009 – YR 2011. The higher total sales volume ratio is the most efficient measure in terms of utilization of asset and reflects the better utilization of the firm’s fund. Low total sales volume indicates the presence of idle capacity.
Sales Performance Reporting
Sales reporting and analysis provides visibility into a company's sales pipeline, integrating information from sales, customer and financial sources for a complete picture of sales performance. Sales Performance Reporting provides insight into expected and actual achievement of the members of the sales organization. Reporting, analysis and distribution of sales forecast data have unique user scalability, visualization and security requirements. The Micro Strategy platform allows organizations to successfully deploy sales reporting applications to thousands of end users, with meaningful analyses and reports that increase overall sales efficiency.
SALES PERFORMANCE REPORT FOR YR 2012 WHICH REPRESENTS THE SPREAD
Particulars |ACS |Intel |Entergy |Johnson & Johnson |Volkswagen |Duke Energy | |Sales |3,49,250.97 |1,81,184.33 |25,831.07 |1,32,653.95 |1,40,536.50 |25,831.07 | |Direct Labour |2,77,559.21 |1,31,243.11 |19,489.28 |98,776.24 |1,04,489.84 |19,489.28 | |Expenses |18,798.93 |477.88 |51.99 |0 |9,725.63 |51.99 | |Total |2,96,358.14 |1,31,720.99 |19,541.27 |98,776.24 |1,14,215.47 |19,541.27 | |Spread |52,892.83 |49,463.34 |6,289.80 |33,877.71 |26,321.03 |6,289.80 | |M Pct |19% |38% |32% |34% |24% |32% | |Working Capital Cost |622.64 |483.69 |395.65 |419.86 |354.64 |395.65 | |Spread after WC |52,270.19 |48,979.65 |5,894.15 |33,457.85 |25,966.39 |5,894.15 | |Emp Taxes |15,238.68 |13,172.86 |2,340.04 |9,179.70 |8,256.34 |2,340.04 | |Spread 2011 |37,031.51 |35,806.79 |3,554.11 |24,278.15 |17,710.05 |3,554.11 | |Ratio 2011 |10.6 |19.76 |13.76 |18.3 |12.6 |13.76 | |
[pic]
SALES PERFORMANCE REPORT FOR YR 2012 WHICH REPRESENTS THE SPREAD
CLIENTS |ACS |Intel |Entergy |Johnson & Johnson |Volkswagen |Duke Energy | |Sales |1,23,961.45 |79,624.98 |10,075.62 |52,236.88 |1,39,501.17 |33,021.77 | |Direct Labour |96,861.87 |59,828.61 |8,125.50 |38,855.26 |1,01,848.28 |24,560.90 | |Expenses |0 |42 |0 |0 |1,335.84 |0 | |Total |96,861.87 |59,786.61 |8,125.50 |38,855.26 |1,00,512.44 |24,560.90 | |Spread |27,099.58 |19,838.37 |1,950.12 |13,381.62 |38,988.73 |8,460.87 | |M Pct |28% |32% |24% |34% |19% |26% | |Working Capital Cost |343.96 |192.99 |247.44 |192.99 |21,451.63 |113.8 | |Spread after WC |26,755.62 |19,645.38 |1,702.68 |13,188.63 |17,537.10 |8,347.07 | |Employee Taxes |10,311.46 |5,191.90 |862.5 |3,434.49 |7,163.33 |1,931.94 | |Spread 2010 |16,444.16 |14,453.48 |840.18 |9,754.14 |10,373.77 |6,415.13 | |Ratio |13.27 |18.15 |8.34 |18.67 |7.44 |19.43 | |
[pic]
INTERPRETATION
The above sales reporting analysis is based on the monthly spread analyses which are particularly for the last month of fiscal year of the different clients. The sales volume of the client ACS was quite low in the YR 2010 where got increased in YR 2011 which gives the profit ratio $10.60 which is comparatively less than YR 2010. The ratio in 2010 is high for client Duke Energy and very less for client Volkswagen. Whereas, the ratio in 2011 is high for client Intel and very less for client ACS.
CHAPTER-V
FINDINGS, SUGGESTIONS
&
CONCLUSION
FINDINGS
1. Based on the commentaries of various management as well as observed secular trend of strong volume growth posted by different clients we are confident about the IT growth.
2. The net sales and spread of the company is expected to grow at CAGR at 15% and 25% respectively over FY12 to FY13.
3. The company has turned up with a minimum profit in the accordance years 2007-2008 and then gradually increased in 2009 till current year.
4. The current ratio of Abacus is being maintained at 2.65 & 2.68 over the past 2 years. It reveals a good position of short term liquidity.
5. The Net profit ratio is tremendously increasing from YR 2008.
6. Abacus Service Corporation is also looking strong by fundamentally in future it is entering in to new business by adding up new clients in this year so as to increase their service capacity and to improve their operations level they will require to add manpower or employees in their business.
SUGGESTION
1. Company should consider all the relevant options for financing their projects because the market if comes down then their profitability would be hampered.
2. Company should focus on cost cutting measures to keep their operations going.
3. Proper forecast should be made by the company about their future demand and should act accordingly.
4. If they want to increase its market share the company should focus on their sales activity to introduce their company as one of the companies in fortune 500 companies list.
5. Company should add more client and severe the best services than their competitors so that they get the more number of proposals and requirement to work on.
6. For financial purpose, the companies should get the funds at the least cost to help bring down the cost in finance for their organization.
7. The company should try to develop or enter into other related segment fields of the products to reduce the losses of the company.
8. The company should concentrate to increase sales to overcome its losses by increasing Net Profit.
CONCLUSIONS
• Fundamental analysis can be valuable, but it should be approached with caution. If you are reading research written by a sell-side analyst, it is important to be familiar with the analyst behind the report. We all have personal biases, and every analyst has some sort of bias.
• There is nothing wrong with this, and the research can still be of great value. Learn what the ratings mean and the track record of an analyst before jumping off the deep end. Corporate statements and press releases offer good information, but they should be read with a healthy degree of skepticism to separate the facts from the spin. Press releases don't happen by accident; they are an important PR tool for companies.
• Investors should become skilled readers to weed out the important information and ignore the hype.
• The concept of Fundamental Analysis studies the performance of the company’s Sales Analysis with this we can know the past performance of the company and considers the long term performance of the companies this helps the business man to take crucial decisions which gives the good returns.
• The Fundamental analysis can give detail information about the well running companies in the market. Before investing in any projects one should study these concepts which are very benefit to the business.
BIBLIOGRAPHY
Financial Management ------ IM Pandey
Financial Management ----- Prasanna Chandra
Financial Management ------ MY khan & P K Jain
(Theory & Analysis)
Mastering Fundamental-Analysis ------ Michael Thomsett
Annual reports of Abacus Service Corporation.
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Structure
Strategy
Style
Shared Value
Va
Systems
Staff
Skills
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