Ratio Analysis


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Some of the major Ratio Analysis for the Cement Industry

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Ratio Analysis

  1. 1. Presented By:Group:2Aditiya ChoudaryAnkit RanjanKumar RahulPrashant JaiswalRohitha Reddy
  2. 2. HISTORY ACC Limited is India’s foremost cement manufacturer with acountrywide network of factories and marketing offices. Established in 1936, ACC has been a pioneer and trend-setterin cement and concrete technology. Among the first companies in India to include commitment toenvironment protection as a corporate objective. ACC is themost preferred cement brand name in India. ACC is now part of the worldwide Holcim Group.
  3. 3. KEY DEMAND DRIVERS INFRASTRUCTURE• Construction linked sector account for 8.3% of 12th plan spend ~850bn.• Infrastructure development - Roads, Ports, Power, etc COMMERCIAL / INDUSTRIAL• High growth in retail, commercial and institutional sector in urban and semi-urban areas• High growth in industry segment HOUSING• Populaltion growth and rising percapita income• Mass urbanization of ~250 Million people over next ~20 years• Thrust by Govt. on Rural / low cost / mass housing.
  4. 4. CORPORATE GOVERNANCE ACC had systems in place for effective strategic planning and processes, risk management, human resources development and succession planning The Company’s core values are based on integrity, respect for the law and strict compliance thereof, emphasis on product quality and a caring spirit. The Shareholders-Investors Grievance Committee was formed way back in 1962 and the Compensation Committee was convened since 1993.
  5. 5.  It is the continuous endeavour of the Board of Directors to achieve the highest standards of Corporate Governance through the adoption of a strategic planning process. The Annual Reports, press releases and other communication have always made full disclosures on various facets of importance to the stakeholders, particularly with regard to information relating to financial matters. As part of their pledge to support the effort to help reduce the carbon footprint of our Country,They have circulated an appeal to their shareholders by agreeing to receive documents such as Annual Reports and other related details by electronic mail instead of physical copy.
  6. 6. LIQUIDITY RATIOS CURRENT RATIO : It is a measure of liquidity calculated by dividing current assets by current liabilities. Current Ratio = Current Assets/Current Liabilities QUICK RATIO/ACID-TEST RATIO : It is the ratio between quick current assets and current liabilities. Quick Ratio =Quick Assets/Current Liabilities DEBTORS TURN OVER RATIO : It is determined by dividing the net credit sales by average debtors outstanding during the year. Debtors Turn Over ratio=Net Credit Sales/Average debtors
  7. 7. LIQUIDITY RATIOS CREDITORS TURN OVER RATIO : It is a ratio between net credit purchases and the average amount of creditors outstanding during the year. Creditors Turn Over Ratio=Net Credit Purchases/Average Creditors
  8. 8. SOLVENCY RATIOS DEBT –EQUITY RATIO : It measures the ratio of long-term or total debt to shareholder equity. Debt –Equity Ratio=Long Term Debt/Shareholder’s Equity OR Debt –Equity Ratio=Total Debt/Shareholder’s Equity DEBT TO TOTAL CAPITAL RATIO :It indicates the extent to which assets are financed by owners fund . Debt To Total Capital Ratio=Long-Term Debt/Permanent Capital OR Debt To Total Capital Ratio=Total Debt/Total Assets
  9. 9. SOLVENCY RATIOS PROPRIETARY RATIO : It indicates the extent to which assets are financed by owners fund. Proprietary ratio=(Proprietor’s Funds/Total Assets)*100 DIVIDEND COVERAGE RATIO : The ratio is the ratio of net profits after taxes(EAT) and the amount of preference dividend. Dividend Coverage=EAT/Preference Dividend FIXED CHARGE COVERAGE RATIO :It measures the firm’s ability to meet all fixed payment obligations. Fixed Charge Coverage Ratio = EBIT+LeasePayment/Interest+Lease payments+(Preference Dividend+Instalment of Principal)/(1-t)
  10. 10. SOLVENCY RATIOS DEBT-SERVICE COVERAGE RATIO(DSCR):It is the ability of a firm to make the contractual payments required on a scheduled basis over the life of the debt.DSCR= n (EAT+Interest+Depriciation+OA/ Instalment) t 1
  11. 11. PROFITABILITY RATIOS GROSS PROFIT RATIO: By comparing Gross Profit percentage to Net Sales we can arrive at the Gross Profit Ratio. Gross Profit Ratio = (Gross Profit / Net Sales ) x 100 Alternatively: Gross Profit Ratio = [ (Sales – Cost of goods sold)/ Net Sales] x 100. NET PROFIT RATIO: It is expressed as: ( Net Profit / Net Sales ) x 100 RETURN ON ASSETS:It is expressed as: (Net Profit after Taxes / Total Assets)
  12. 12. PROFITABILITY RATIOS RETURN ON CAPITAL EMPLOYED: ( Net Profit before Interest & Tax / Average Capital Employed) x 100 (Average Capital Employed is the average of the equity share capital and long term funds provided by the owners and the creditors of the firm at the beginning and end of the accounting period.) RETURN ON EQUITY CAPITAL(ROE): (Net Profit after Taxes / Tangible Net Worth) PRICE EARNING RATIO: (Market Price Per Equity Share/Earning Per Share)
  13. 13. PROFITABILITY RATIOS EARNING PER SHARE: (Net profit after Taxes and Preference Dividend/ No. of Equity Shares) CASH EARNING PER SHARE: (Net profit available to equity owners+ Depreciation +Amortisation+ Non cash expense / Number of equity shares outstanding)
  14. 14. EFFICIENCY RATIOS INVENTORY TURNOVER RATION: (Cost of goods sold/Average inventory)Where: Average inventory=(Opening stock +Closing stock)/2 ASSET TURNOVER RATIO: (Net sales/Tangible Assets) FIXED ASSET TURNOVER RATIO: (Net sales/Fixed Assets) CURRENTASSET TURNOVER RATIO: (Net Sales/Current Assets)
  15. 15. EFFICIENCY RATIOS WORKING CAPITAL TURNOVER RATIO: (Cost of goods sold/Net Working capital)Where: (Net Working Capital=Current Assets-Current Liabilities)
  16. 16. HIGH & LOW PRICES
  17. 17. CONCLUSION The finding of the survey is enough proof to show that ACC cements ranks high in quality, composition etc., It is observed that ACC cement has a maintained better product image among the person who have used it and are using it. But in a competitive field one should not satisfy himself with present performance. In order to maintain higher competitive efficiency there should be continuous product planning and market improvement. ACC cement producer and their dealers may consider the preference analysis report and suggestions for achieving higher standards of marketing performance in the future.