A study on financial & performance analysis of acc limitedPresentation Transcript
A STUDY ON FINANCIAL & PERFORMANCE ANALYSIS OF ACC LIMITED. Presented by: Vignesh C J 8uta45
ABOUT INDUSTRY The Indian cement industry is the second largest market after China. Cement industry plays an important role in the process of development of an economy. The infrastructural development of a country depends considerably on the growth of cement industry. Cement is used as binding material along with bricks, stones, iron and steel in the construction building, bridges, roads, etc..
ABOUT COMPANY India's foremost manufacturer of cement and concrete. spread throughout the country with 14 modern cement factories, more than 30 Ready mix concrete plants, 20 sales offices, and several zonal offices. Every factory has pollution control equipment and devices. Company has won several prizes and certificates of merits for environmental measures undertaken at its various plants and mines. As the largest cement producer in India, it is one of the biggest customers of the Indian Railways.
OBJECTIVE OF THE STUDY To compute the financial position of the ACC Ltd., To analyze the profitability and solvency position of the firm. To analyze the efficiency of the firm through ratios. To suggest ways and means to improve the present condition. To examine the over all performance of the company. To study the future prospect of Indian Cement Industry.
FINANCIAL ANALYSIS The primary objective is to judge profits and financial soundness of the company. The financial analysis are the mirrors, which reflect the financial positions and operating strength or weakness of the concern Better understanding of a firm’s position and performance. Consist of various ratios.
RATIOS USED CURRENT RATIO The company’s ability to meet current obligations, the current assets must be sufficient to pay current liabilities. Current assets *100 Current liability QUICK RATIO Quick assets are those assets, which are readily convertible into cash. They include cash and bank balances, bills receivable, debtors, short-term investments. current Assets - Inventories Current Liability
Cont… CASH RATIO Trade investment or marketable securities are equivalent of cash; they may be included in the computation of cash ratio. Cash + Marketable Securities Current Liabilities NETWORKING CAPITAL RATIO The difference between current assets and current liabilities excluding short-term bank borrowing. The larger NWC has the greater ability to meet its current obligations. Net Working Capital Net Assets
Cont… DEBTORS TURNOVER RATIO The liquidity position of the firm depends on the quality of debtors largely. Sales Debtors DEBTORS COLLECTION PERIOD The ratio indicates the extent to which the debts have been collected in time. It gives the average debt collection period Debtors Sales x 360
Cont… NET ASSETS TURNOVER RATIO Net assets include Net Fixed Assets (NFA) and Net Current Asset (NCA) that is Current Assets (CA) minus Current Liabilities (CL). Sales Net assets CURRENT ASSETS TURNOVER RATIO The firm may wish to know its efficiency of utilizing fixed assets and current assets separately. Sales Current assets
Cont… WORKING CAPITAL TURNOVER RATIO The ratio indicates the relationship between the sales and working capital and this ratio shows whether the working capital has been efficiency or not. Sales Network capital INVENTORY TURNOVER RATIO The efficiency of the firm in producing and selling its product. Cost of goods sold Average Inventory
Cont… FIXED ASSETS TURNOVER RATIO Indicates whether the investments in fixed assets have been judicious or not. Firms efficiency of utilizing fixed assets. Sales Net fixed assets GROSS PROFIT RATIO The difference between sales and the manufacturing cost of goods sold. Gross profit Sales x 100
Cont… NET PROFIT RATIO Obtained when operating expenses, interest and taxes are subtracted from the gross profit. Net profit Salesx 100 STOCK TO CURRENT ASSETS RATIO This ratio establishes the relationship between stock and current assets. This shows low much of current assets are occupied by the stock. Stock Current Assets
Cont… SUNDRY DEBTORES TO TURNOVER RATIO The relationship between sundry debtors and current assets. Higher ratio indicates the high contribution of sundry debtors towards current assets of the firm. Sundry debtors Current Assets RETURN ON CAPITAL EMPLOYED This ratio is also called Return on Investment. It measures the sufficiency or profit in relation to Capital Employed. Net Profit Capital Employed *100
Cont… RETURN ON SHAREHOLDERS FUND Determines the profitability from the Shareholders point of view. Net Profit (After Interest & Tax) Shareholders Fund RETURN ON CAPITAL TURNOVER RATIO Calculate the rate of return on common equity, and is a measure of how well a company uses its stockholders equity to generate revenue. Sales Capital Employed
Cont… DEBT EQUITY RATIO Indicates what is the proportion of fixed interest bearing capital taken by the company, as compared to the equity shareholders capital. Total debt *100 Equity CAPITAL EMPLOYED TO NET WORK RATIO showsfunds contributed by lenders and owners
Capital Employed (CE) Net Worth (NW)
Cont… EQUITY RATIO The ratio of proprietor’s funds to total funds is an important ratio for determining long-term solvency of a firm. The total asset on the other hand denotes total resources of the concern Shareholders fund Total Assets RATIO OF FIXED ASSETS TO PROPRIETORS FUND The ratio establishes the relationship between the fixed assets and shareholders funds i.e. the share capital plus reserves, surplus and retained earnings. Fixed Assets Shareholders fund
Cont… RATIO OF CURRENT ASSETS TO PROPRIETORS FUND The ratio indicates the extent to which proprietors funds are invested in current assets.
Current Assets Shareholders funds
RATIO ANALYSIS OF ACC CEMENTS
CHART SHOWING THE RATIO ANALYSIS
FINDINGS Current Ratio shows an average ratio of 1.21which is less than the ideal ratio is 2:1. Cash Ratio shows as average greater than its ideal ratio that is 0.5. Debtors Turnover Ratio shows the amount of credit sales has been increased, collection period is derived as 18 days. In the calculation of Working capital Turnover Ratio there is an adequacy of fund except the year 2007-2008. Gross profit ratio is fluctuating during the period of study. The company’s Net Profit Margin has declined. Capital Employed in the concern has been efficiently utilized
CONCLUSION The company should maintain quick ratio of 1:1. The Debt/Equity ratio is satisfactory during the period of study. Company is efficiently utilizing its Fixed Assets and Current Assets in generating sales Inventory Turnover ratio implies that the Inventory has been utilized efficiently.