A study on financial & performance analysis of acc limited


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A study on financial & performance analysis of acc limited

  1. 1. A STUDY ON FINANCIAL & PERFORMANCE ANALYSIS OF ACC LIMITED.<br />Presented by:<br />Vignesh C J<br /> 8uta45<br />
  2. 2. HISTORY:<br />
  3. 3.
  4. 4. ABOUT INDUSTRY<br />The Indian cement industry is the second largest market after China.<br />Cement industry plays an important role in the process of development of an economy.<br />The infrastructural development of a country depends considerably on the growth of cement industry.<br />Cement is used as binding material along with bricks, stones, iron and steel in the construction building, bridges, roads, etc..<br />
  5. 5. ABOUT COMPANY<br />India's foremost manufacturer of cement and concrete.<br />spread throughout the country with 14 modern cement factories, more than 30 Ready mix concrete plants, 20 sales offices, and several zonal offices.<br />Every factory has pollution control equipment and devices. <br />Company has won several prizes and certificates of merits for environmental measures undertaken at its various plants and mines.<br />As the largest cement producer in India, it is one of the biggest customers of the Indian Railways.<br />
  6. 6. OBJECTIVE OF THE STUDY<br />To compute the financial position of the ACC Ltd.,<br />To analyze the profitability and solvency position of the firm. <br />To analyze the efficiency of the firm through ratios.<br />To suggest ways and means to improve the present condition. <br />To examine the over all performance of the company.<br />To study the future prospect of Indian Cement Industry.<br />
  7. 7. FINANCIAL ANALYSIS<br />The primary objective is to judge profits and financial soundness of the company.<br />The financial analysis are the mirrors, which reflect the financial positions and operating strength or weakness of the concern<br />Better understanding of a firm’s position and performance.<br />Consist of various ratios.<br />
  8. 8. RATIOS USED<br />CURRENT RATIO<br /> The company’s ability to meet current obligations, the current assets must be sufficient to pay current liabilities.<br />Current assets *100<br /> Current liability<br />QUICK RATIO<br /> Quick assets are those assets, which are readily convertible into cash. They include cash and bank balances, bills receivable, debtors, short-term investments. <br />current Assets - Inventories<br /> Current Liability<br />
  9. 9. Cont…<br />CASH RATIO <br /> Trade investment or marketable securities are equivalent of cash; they may be included in the computation of cash ratio. <br />Cash + Marketable Securities <br /> Current Liabilities<br />NETWORKING CAPITAL RATIO<br />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. <br />Net Working Capital <br /> Net Assets <br />
  10. 10. Cont…<br />DEBTORS TURNOVER RATIO <br />The liquidity position of the firm depends on the quality of debtors largely.<br />Sales<br /> Debtors<br /> DEBTORS COLLECTION PERIOD<br /> The ratio indicates the extent to which the debts have been collected in time. It gives the average debt collection period<br />Debtors <br /> Sales x 360 <br />
  11. 11. Cont…<br />NET ASSETS TURNOVER RATIO <br /> Net assets include Net Fixed Assets (NFA) and Net Current Asset (NCA) that is Current Assets (CA) minus Current Liabilities (CL). Sales <br /> Net assets<br />CURRENT ASSETS TURNOVER RATIO <br />The firm may wish to know its efficiency of utilizing fixed assets and current assets separately.<br />Sales<br /> Current assets<br />
  12. 12. Cont…<br />WORKING CAPITAL TURNOVER RATIO<br /> The ratio indicates the relationship between the sales and working capital and this ratio shows whether the working capital has been efficiency or not. <br />Sales <br />Network capital<br />INVENTORY TURNOVER RATIO<br /> The efficiency of the firm in producing and selling its product. <br />Cost of goods sold <br /> Average Inventory <br />
  13. 13. Cont…<br /> FIXED ASSETS TURNOVER RATIO<br /> Indicates whether the investments in fixed assets have been judicious or not. Firms efficiency of utilizing fixed assets.<br />Sales<br />Net fixed assets <br />GROSS PROFIT RATIO<br />The difference between sales and the manufacturing cost of goods sold.<br />Gross profit <br />Sales x 100 <br />
  14. 14. Cont…<br />NET PROFIT RATIO<br />Obtained when operating expenses, interest and taxes are subtracted from the gross profit. <br />Net profit <br />Salesx 100<br />STOCK TO CURRENT ASSETS RATIO<br />This ratio establishes the relationship between stock and current assets. This shows low much of current assets are occupied by the stock. <br />Stock <br />Current Assets <br />
  15. 15. Cont…<br />SUNDRY DEBTORES TO TURNOVER RATIO<br /> The relationship between sundry debtors and current assets. Higher ratio indicates the high contribution of sundry debtors towards current assets of the firm.<br />Sundry debtors <br /> Current Assets <br />RETURN ON CAPITAL EMPLOYED<br /> This ratio is also called Return on Investment. It measures the sufficiency or profit in relation to Capital Employed.<br />Net Profit<br /> Capital Employed *100<br />
  16. 16. Cont…<br />RETURN ON SHAREHOLDERS FUND<br /> Determines the profitability from the Shareholders point of view.<br />Net Profit (After Interest & Tax)<br /> Shareholders Fund<br />RETURN ON CAPITAL TURNOVER RATIO<br /> Calculate the rate of return on common equity, and is a measure of how well a company uses its stockholders equity to generate revenue. <br />Sales<br /> Capital Employed<br />
  17. 17. Cont…<br />DEBT EQUITY RATIO <br /> Indicates what is the proportion of fixed interest bearing capital taken by the company, as compared to the equity shareholders capital.<br />Total debt *100<br />Equity<br />CAPITAL EMPLOYED TO NET WORK RATIO <br /> showsfunds contributed by lenders and owners <br /> <br />Capital Employed (CE) <br />Net Worth (NW)<br />
  18. 18. Cont…<br />EQUITY RATIO <br /> 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<br />Shareholders fund<br /> Total Assets<br /> RATIO OF FIXED ASSETS TO PROPRIETORS FUND<br />The ratio establishes the relationship between the fixed assets and shareholders funds i.e. the share capital plus reserves, surplus and retained earnings.<br />Fixed Assets<br />Shareholders fund<br />
  19. 19. Cont…<br />RATIO OF CURRENT ASSETS TO PROPRIETORS FUND<br /> The ratio indicates the extent to which proprietors funds are invested in current assets. <br /> <br />Current Assets<br /> Shareholders funds<br />
  21. 21. Cont…<br />
  22. 22. Cont…<br />
  24. 24. Cont…<br />
  25. 25. Cont…<br />
  26. 26. FINDINGS<br />Current Ratio shows an average ratio of 1.21which is less than the ideal ratio is 2:1.<br /> Cash Ratio shows as average greater than its ideal ratio that is 0.5. <br /> Debtors Turnover Ratio shows the amount of credit sales has been increased, collection period is derived as 18 days.<br />In the calculation of Working capital Turnover Ratio there is an adequacy of fund except the year 2007-2008.<br />Gross profit ratio is fluctuating during the period of study.<br />The company’s Net Profit Margin has declined.<br />Capital Employed in the concern has been efficiently utilized<br />
  27. 27. CONCLUSION<br />The company should maintain quick ratio of 1:1. <br /> The Debt/Equity ratio is satisfactory during the period of study.<br />Company is efficiently utilizing its Fixed Assets and Current Assets in generating sales<br />Inventory Turnover ratio implies that the Inventory has been utilized efficiently.<br />
  28. 28. THANK YOU !!!<br />