A STUDY ON FINANCIAL & PERFORMANCE ANALYSIS OF ACC LIMITED.

Presented by: Vignesh C

J 8uta45

HISTORY:

YEAR HAPPENINGS

16th century Roman’s was the first to use cement .

1760 John Smeaton was first to develop best composition of hydraulic cement.

1824 Joseph Aspdin was granted a patent (no. 5022) for “Portland cement”.

YEAR HAPPENING

1904 First cement factory was started in Chennai.

1914 Manufacture of Portland cement on large scale started by Indian Cement Co.Ltd.

1924 10 cement factories in India with total production of 5.81 lakh tones PA.

1936 Incorporation of The Associated Cement Companies

Limited on August 1, 1936.

1939 17 Factories in India with total capacity of 26.15 lakh tones PA.

1947 After partition 18 factories remained in India of total capacity 21.15 lakh tones.

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

• 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…

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

• 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

Sales x 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…

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   shows funds 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 fundTotal 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 AssetsShareholders 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

PARTICULARSYEARS

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

CURRENT RATIO 1.24 1.22 1.27 1.16 1.31 1.07

QUICK RATIO 0.76 0.75 0.66 0.67 0.91 0.72

CASH RATIO .69 .66 .57 .68 .95 .76

NETWORKING CAPITAL RATIO .06 .05 .06 .05 .11 .03

DEBTORS TURNOVER RATIO 19.17 18.01 20.48 21.45 27.12 24.22

DEBTORS COLLECTION PERIOD

18.78 20.89 18.58 22.38 13.27 14.86

NETASSETS TURNOVER RATIO 1.24 1.08 1.15 .89 1.33 1.41

Cont…PARTICULARS

YEARS

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

FIXED ASSETS TURNOVER RATIO 1.47 1.38 1.56 1.10 1.99 2.11

CURRENT ASSETS TURNOVER RATIO 3.92 3.24 3.21 2.25 2.89 3.18

WORKING CAPITAL TURNOVER RATIO

19.91 20.08 20.39 16.76 12.11 48.48

INVENTORY TURNOVER RATIO 8.93 7.28 5.88 4.27 7.49 6.79

GROSS PROFIT RATIO 11.57 16 18 19.78 19 29

NET PROFIT RATIO

2.98 6.09 9.70 16.99 20.92 20.53

STOCK TO CURRENT ASSETS RATIO .39 .37 .45 .42 .31 .33

Cont…PARTICULARS

YEARS2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RETURN ON SHAREHOLDERS FUND

.09 .15 .23 .25 .39 .37

CAPITAL TURNOVER RATIO 1.12 .91 .94 .71 1.07 1.0

DEBT EQUITY RATIO .66 .63 .64 .77 .49 .50

CAPITAL EMPLOYED TO NET WORK RATIO 2.69 2.28 2.14 1.69 1.39 1.19

EQUITY RATIO .38 .44 .47 .59 .72 .84

FIXED ASSETS TO PROPRIETORS FUND 2.20 1.75 1.57 1.36 .93 .80

CURRENT ASSETS TO PROPRIETORS FUND

.83 .75 .76 .67 .64 .53

CHART SHOWING THE RATIO ANALYSIS

Cont…

Cont…

CURRENT R

ATIO

DEBTO

RS TURNOVER

RATIO

DEBTO

RS COLLE

CTION PER

IOD

NETASSE

TS TU

RNOVER RATIO

WORKING CAPITAL T

URNOVER RATIO

INVENTO

RY TURNOVER

RATIO

GROSS PROFIT

RATIO

0

5

10

15

20

25

30

35

40

45

50

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

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.

THANK YOU !!!