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Working Capital:The life blood of business, as is evident, signified funds required for day-to-day
operations of the firm. The management of working capital assumes great importance
because shortage of working capital funds is perhaps the biggest possible cause of failure
of many business units in recent times. There it is of great importance on the part of
management to pay particular attention to the planning and control for working capital.
An attempt has been made to make critical study of the various dimensions of the
working capital management of ACC.
Decisions relating to working capital and short term financing are referred to as working
capital management. These involve managing the relationship between a firm's shortterm assets and its short-term liabilities. The goal of Working capital management is to
ensure that the firm is able to continue its operations and that it has sufficient money flow
to satisfy both maturing short-term debt and upcoming operational expenses.
Objective of the study:The following are the main objective which has been undertaken in the present study:
1. To determine the amount of working capital requirement and to calculate various
ratios relating to working capital.
2. To analyze the Indian Cement Industry.
3. To evaluate the financial performance of ACC limited using financial tools.
4. To suggest the steps to be taken to increase the efficiency in management of
working capital.
Place of study:The project study is carried out at the Finance Department of ACC cements ltd corporate
office Situated at Hyderabad, Telagana. The study is undertaken as a part of the MBA
curriculum.
Study design and methodology:Two types of data are collected, one is primary data and second one is secondary data.
The primary data were collected from the Department of finance, ACC Ltd, Hyderabad.
The secondary data were collected from the Annual Report of ACC & ACC website, etc.
Scope: - The study has got a wide & fast scope. It tries to find out the players in the
industry & focuses on the upcoming trends. It also tries to show the financial
performance of the major player of the industry i.e.; ACC Ltd.
Limitations:There may be limitations to this study because the study duration is very short and its
not possible to observe every aspect of working capital management practices. The data
collected were mostly secondary in nature.
REVIEW OF LITERATURE
FINANCIAL PERFORMANCE ANALYSIS
Financial performance analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of
balance sheet and profit and loss account. It also helps in short-term and long term
forecasting and growth can be identified with the help of financial performance analysis.
The dictionary meaning of analysis is to resolve or separate a thing in to its element or
components parts for tracing their relation to the things as whole and to each other. The
analysis of financial statement is a process of evaluating the relationship between the
component parts of financial statement to obtain a better understanding of the firms
position and performance. This analysis can be undertaken by management of the firm or
by parties outside the namely, owners,creditors,investors.
The first step involves the re-organization of the entire financial data
contained the financial statements. Therefore the financial statements
are broke down into individual components and re-grouped into few
principle elements according to their resemblances and affinities. Thus
the balance sheet and profit and loss accounts are completely recasted and presented in the condensed form entirely different from
their original shape.
Thus financial analysis helps to highlight the facts and relationships concerning
managerial performance, corporate efficiency, financial strength and weakness and credit
worthiness of the company.
foundation for evaluating and pricing credit risk and for doing fundamental company
valuation.
1) Financial statement analysis typically starts with reformulating the reported financial
information. In relation to the income statement, one common reformulation is to divide
reported items into recurring or normal items and non-recurring or special items. In this
way, earnings could be separated in to normal or core earnings and transitory earnings.
The idea is that normal earnings are more permanent and hence more relevant for
prediction and valuation. Normal earnings are also separated into net operational profit
after taxes (NOPAT) and net financial costs. The balance sheet is grouped, for example,
in net operating assets (NOA), net financial debt and equity.
2) Analysis and adjustment of measurement errors question the quality of the reported
accounting numbers. The reported numbers can for example be a bad or noisy
representation of invested capital, for example in terms of NOA, which means that the
return on net operating assets (RNOA) will be a noisy measure of the underlying
profitability (the internal rate of return, IRR). Expensing of R&D is an example when
such investment expenditures are expected to yield future economic benefits, suggesting
that R&D creates assets which should have been capitalized in the balance sheet. An
example of an adjustment for measurement errors is when the analyst removes the R&D
expenses from the income statement and put them in the balance sheet. The R&D
expenditures are then replaced by amortization of the R&D capital in the balance sheet.
Another example is to adjust the reported numbers when the analyst suspects earnings
management.
return on net operating assets, NFIR is the net financial interest rate, NFD is net financial
debt and E is equity. In this way, the sources of ROE could be clarified.
Unlike other ratios, return on capital has a theoretical benchmark, the cost of capital also called the required return on capital. For example, the return on equity, ROE, could
be compared with the required return on equity, kE, as estimated, for example, by the
capital asset pricing model. If ROE < kE (or RNOA > WACC, where WACC is the
weighted average cost of capital), then the firm is economically profitable at any given
time over the period of ratio analysis. The firm creates values for its owners.
Insights from financial statement analysis could be used to make forecasts and to evaluate
credit risk and value the firm's equity. For example, if financial statement analysis detects
increasing superior performance ROE - kE > 0 over the period of financial statement
analysis, then this trend could be extrapolated into the future. But as economic theory
suggests, sooner or later the competitive forces will work - and ROE will be driven
toward kE.
A financial statement (or financial report) is a formal record of the financial
activities of a business, person, or other entity. In British Englishincluding United
Kingdom company lawa financial statement is often referred to as an account,
although the term financial statement is also used, particularly by accountants.
For a business enterprise, all the relevant financial information, presented in a structured
manner and in a form easy to understand, are called the financial statements. They
prepared by professionals (financial analysts), thus providing them with the basis
for making investment decisions.
Financial institutions (banks and other lending companies) use them to decide
whether to grant a company with fresh working capital or extend debt securities
(such as a long-term bank loan or debentures) to finance expansion and other
significant expenditures.
Vendors who extend credit to a business require financial statements to assess the
creditworthiness of the business.
Media and the general public are also interested in financial statements for a
variety of reasons.
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statements or qualifications as to its fairness and accuracy. The audit opinion on the
financial statements is usually included in the annual report.
There has been much legal debate over who an auditor is liable to. Since audit reports
tend to be addressed to the current shareholders, it is commonly thought that they owe a
legal duty of care to them. But this may not be the case as determined by common law
precedent. In Canada, auditors are liable only to investors using a prospectus to buy
shares in the primary market. In the United Kingdom, they have been held liable to
potential investors when the auditor was aware of the potential investor and how they
would use the information in the financial statements. Nowadays auditors tend to include
in their report liability restricting language, discouraging anyone other than the
addressees of their report from relying on it. Liability is an important issue: in the UK, for
example, auditors have unlimited liability.
In the United States, especially in the post-Enron era there has been substantial concern
about the accuracy of financial statements. Corporate officers (the chief executive officer
(CEO) and chief financial officer (CFO)) are personally liable for attesting that financial
statements "do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by
th[e] report." Making or certifying misleading financial statements exposes the people
involved to substantial civil and criminal liability. For example Bernie Ebbers (former
CEO of WorldCom) was sentenced to 25 years in federal prison for allowing WorldCom's
revenues to be overstated by billion over five years.
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In the United States, prior to the advent of the internet, the annual report was considered
the most effective way for corporations to communicate with individual shareholders.
Blue chip companies went to great expense to produce and mail out attractive annual
reports to every shareholder. The annual report was often prepared in the style of a coffee
table book.
collecting bodies (e.g. taxation authorities). Many regulators use such messages to collect
financial and economic information.
In financial accounting, a balance sheet or statement of financial position is a summary
of the financial balances of a sole proprietorship, a business partnership, a corporation or
other business organization, such as an LLC or an LLP. Assets, liabilities and ownership
equity are listed as of a specific date, such as the end of its financial year. A balance sheet
is often described as a "snapshot of a company's financial condition". Of the four basic
financial statements, the balance sheet is the only statement which applies to a single
point in time of a business' calendar year.
A standard company balance sheet has three parts: assets, liabilities and ownership equity.
The main categories of assets are usually listed first, and typically in order of liquidity.
Assets are followed by the liabilities. The difference between the assets and the liabilities
is known as equity or the net assets or the net worth or capital of the company and
according to the accounting equation, net worth must equal assets minus liabilities.
Another way to look at the same equation is that assets equals liabilities plus owner's
equity. Looking at the equation in this way shows how assets were financed: either by
borrowing money (liability) or by using the owner's money (owner's equity). Balance
sheets are usually presented with assets in one section and liabilities and net worth in the
other section with the two sections "balancing."
A business operating entirely in cash can measure its profits by withdrawing the entire
bank balance at the end of the period, plus any cash in hand. However, many businesses
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are not paid immediately; they build up inventories of goods and they acquire buildings
and equipment. In other words: businesses have assets and so they cannot, even if they
want to, immediately turn these into cash at the end of each period. Often, these
businesses owe money to suppliers and to tax authorities, and the proprietors do not
withdraw all their original capital and profits at the end of each period. In other words
businesses also have liabilities.
Types
A balance sheet summarizes an organization or individual's assets, equity and liabilities at
a specific point in time. We have two forms of balance sheet. They are the report form
and the account form. Individuals and small businesses tend to have simple balance
sheets. Larger businesses tend to have more complex balance sheets, and these are
presented in the organization's annual report. Large businesses also may prepare balance
sheets for segments of their businesses. A balance sheet is often presented alongside one
for a different point in time (typically the previous year) for comparison.
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A small business bump that balance sheet lists current assets such as cash, accounts
receivable, and inventory, fixed assets such as land, buildings, and equipment, intangible
assets such as patents, and liabilities such as accounts payable, accrued expenses, and
long-term debt. Contingent liabilities such as warranties are noted in the footnotes to the
balance sheet. The small business's equity is the difference between total assets and total
liabilities.
Assets
Current assets
1. Cash and cash equivalents
2. Accounts receivable
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3. Inventories
4. Prepaid expenses for future services that will be used within a year
Liabilities
See Liability (accounting)
1. Accounts payable
2. Provisions for warranties or court decisions
3. Financial liabilities (excluding provisions and accounts payable), such as
promissory notes and corporate bonds
4. Liabilities and assets for current tax
5. Deferred tax liabilities and deferred tax assets
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6. Unearned revenue for services paid for by customers but not yet provided
Equity
The net assets shown by the balance sheet equals the third part of the balance sheet,
which is known as the shareholders' equity. It comprises:
1. Issued capital and reserves attributable to equity holders of the parent company
(controlling interest)
2. Non-controlling interest in equity
Formally, shareholders' equity is part of the company's liabilities: they are funds "owing"
to shareholders (after payment of all other liabilities); usually, however, "liabilities" is
used in the more restrictive sense of liabilities excluding shareholders' equity. The
balance of assets and liabilities (including shareholders' equity) is not a coincidence.
Records of the values of each account in the balance sheet are maintained using a system
of accounting known as double-entry bookkeeping. In this sense, shareholders' equity by
construction must equal assets minus liabilities, and are a residual.
Regarding the items in equity section, the following disclosures are required:
1. Numbers of shares authorized, issued and fully paid, and issued but not fully paid
2. Par value of shares
3. Reconciliation of shares outstanding at the beginning and the end of the period
4. Description of rights, preferences, and restrictions of shares
5. Treasury shares, including shares held by subsidiaries and associates
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Income statement (also referred to as profit and loss statement (P&L), revenue
statement, statement of financial performance, earnings statement, operating
statement or statement of operations) is a company's financial statement that indicates
how the revenue (money received from the sale of products and services before expenses
are taken out, also known as the "top line") is transformed into the net income (the result
after all revenues and expenses have been accounted for, also known as Net Profit or the
"bottom line"). It displays the revenues recognized for a specific period, and the cost and
expenses charged against these revenues, including write-offs (e.g., depreciation and
amortization of various assets) and taxes. The purpose of the income statement is to show
managers and investors whether the company made or lost money during the period
being reported.
The important thing to remember about an income statement is that it represents a period
of time. This contrasts with the balance sheet, which represents a single moment in time.
Charitable organizations that are required to publish financial statements do not produce
an income statement. Instead, they produce a similar statement that reflects funding
sources compared against program expenses, administrative costs, and other operating
commitments. This statement is commonly referred to as the statement of activities.
Revenues and expenses are further categorized in the statement of activities by the donor
restrictions on the funds received and expended.
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Increased infrastructure spending has been a key focus area. In the Union Budget
2010-11, US$ 37.4 billion has been provided for infrastructure development.
The government has also increased budgetary allocation for roads by 13 per cent
to US$ 4.3 billion.
Future Trends: The cement industry is expected to grow steadily in 2009-2010 and increase
capacity by another 50 million tons in spite of the recession and decrease in
demand from the housing sector.
The industry experts project the sector to grow by 9 to 10% for the current
financial year provided India's GDP grows at 7%.
India ranks second in cement production after China.
The major Indian cement companies are Associated Cement Company Ltd
(ACC), Grasim Industries Ltd, Ambuja Cements Ltd, J.K Cement Ltd and Madras
Cement Ltd.
The major players have all made investments to increase the production capacity
in the past few months, heralding a positive outlook for the industry.
The housing sector accounts for 50% of the demand for cement and this trend is
expected to continue in the near future.
PORTERS FIVE FORCE MODEL:- It is useful for analyzing the industry overall and
determining the level of competition among different existing players .It can be
understood under different topics .Along with the industry we will try to point out the
conditions for ACC too.
i) THREAT OF NEW ENTRANTS:ACC has threat from new entrants like TATA; Reliance etc can enter into this industry.
But there are certain barriers to their entry. These are: Availability of raw material
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ii) BARGAINING POWER OF SUPPLIERS:Suppliers have very much impact on cement industry because of the following reasons: Raw materials used in cement are gypsum, fly ash and slag. There are few
suppliers of these materials.
Quality of finished goods i.e. cement is very important for ACC ltd.
As already said, there are high switching costs in cement industry.
There is no substitute to the raw material used in cement.
iii) BARGAINING POWER OF BUYER:- ACC ltd plays the role of buyer. It has
following bargaining powers:
There are only few buyers of raw material of cement.
ACC has major stake in cement industry i.e. 11% of the world.
iv) THREAT OF SUBSTITUTES:- It has threat from its competitors like Ambuja
cements, Birla cements, Binani cements ,Grasim etc.
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different promotional strategies to attract buyers. So, all the leading players in the
industry have to analyze the situation frequently & they have to keep changing them too.
SWOT ANALYSIS
Strengths: 1. The industry is likely to maintain its growth momentum and continue growing at
about
In the coming few years the demand for the cement will increase which will be
booming news for cement manufactures. As capacity utilization is over 90% now.
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3. Additional capacity of 20 million tons per annum will be required to match the
demand.
Threats: 1. The recent moves by the Central Government in making the import of the
cement total duty free, is a cause of worry for the Indian cement industry.
2. Further recent changes in the Central Excise Duty structure by way of
introduction of multiple slabs of Excise Duty is also a cause of worry for the
industry.
3. Almost all the major players in the industry have announced substantial
increase in the capacity and the possibility of over supply situation cannot be
ruled out.
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Scarcity of good quality Coal is some other factors which are cause of concern
for the industry.
Competitor analysis (Overall industry):ACC, with an installed capacity of 22.63 MTPA, enjoys an 11% market share in India,
which with its total installed capacity of 207 MTPA, India is the second largest cement
producing country in the world. ACCs nation-wide presence and brand image ensures a
competitive edge and helps it to withstand regional fluctuations in prices and also to
adapt its distribution to market place needs. Its key competitors are as follows:ACC Ltd is the market leader with the capacity of 22.63 MTPA .The top ten
companies are given below with the details:Name
ACC Limited
Production
17,902
Installed Capacity
18,640
41,550.89 lakhs
Name
Production
15,094
Installed Capacity
14,860
31,848 lakhs
Name
Ultratech
Production
13,707
Installed Capacity
17,000
97,700 lakhs
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Name
Grasim
Production
14,649
Installed Capacity
14,115
1,64,800 lakhs
Name
India Cements
Production
8,434
Installed Capacity
8,810
43,218 lakhs
Name
JK Cement Ltd
Production
6,174
Installed Capacity
6,680
14,234.40 lakhs
Name
Jaypee Group
Production
6,316
Installed Capacity
6,531
Name
Century Cement
Production
6,636
Installed Capacity
6,300
Name
Madras Cement
Production
4,550
Installed Capacity
5,457
49,081 lakhs
Name
Birla Corp.
Production
5,150
Installed Capacity
5,113
9,061 lakhs
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The company's various businesses are supported by a powerful, in-house research and
technology backup facility - the only one of its kind in the Indian cement industry. This
ensures not just consistency in product quality but also continuous improvements in
products, processes, and application areas.
ACC has rich experience in mining, being the largest user of limestone, and it is also one
of the principal users of coal. As the largest cement producer in India, it is one of the
biggest customers of the Indian Railways, and the foremost user of the road transport
network services for inward and outward movement of materials and products.
ACC has also extended its services overseas to the Middle East, Africa, and South
America, where it has provided technical and managerial consultancy to a variety of
consumers, and also helps in the operation and maintenance of cement plants abroad.
ACC is among the first companies in India to include commitment to environmental
protection as one of its corporate objectives, long before pollution control laws came into
existence. The company installed pollution control equipment and high efficiency
sophisticated electrostatic precipitators for cement kilns, raw mills, coal mills, power
plants and coolers as far back as 1966. Every factory has state-of-the art pollution control
equipment and devices.
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countrys nationalist pride that touched all walks of life including trade, commerce and
business.
The first success came in a move towards cooperation in the countrys young cement
industry and culminated in the historic merger of ten companies to form a cement giant.
These companies belonged to four prominent business groups Tatas, Khataus, Killick
Nixon and F E Din Shaw groups. ACC was formally established on August 1, 1936.
Sadly, F E Din Shaw, the man recognized as the founder of ACC, died in January 1936.
Just months before his dream could be realized.
The ACC Board comprises of 13 persons. These include executive, non-executive, and
nominee directors. This group is responsible for determining the objectives and broad
policies of the Company - consistent with the primary objective of enhancing long-term
shareholder value.
The Board meets once a month. Two other small groups of directors - comprising
Shareholders'/Investors' Grievance Committee and Audit Committee of the Board of
Directors - also meet once a month on matters pertaining to the finance and share
disciplines. During the last decade, there has been a streamlining of the senior
management structure that is more responsive to the needs of the Company's prime
business. A Managing Committee - comprising, in addition to the Managing Director and
the two executive directors, the presidents representing multifarious disciplines: finance,
production, marketing, research and consultancy, engineering and human resources
meets once a week.
A Strategic Alliance:
The house of Tata was intimately associated with the heritage and history of ACC, right
from its formation in 1936 up to 2000. The Tata group sold all 14.45% of its
shareholdings in ACC in three stages to subsidiary companies of Gujarat Ambuja
Cements Ltd. (GACL), who are now the largest single shareholder in ACC.
This enabled ACC to enter into a strategic alliance with GACL; a company reputed for its
brand image and cost leadership in the cement industry.
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S.
No.
1
Units
Bargarh
Chaibasa
2
31
State
Bargarh Cement Works
Chaibasa Cement Works
Capacity (MTPA)
0.96
0.87
3
4
5
6
7
8
9
10
11
12
Chanda
Damodhar
Gagal
Jamul
Kymore
Lakheri
Madukkarai
Sindri
Wadi
New Wadi Plant
1.00
0.53
4.40
(Gagal I and II)
1.58
2.20
1.50
0.96
0.91
2.59
2.60
Tikaria
Plant
2.31
Vision:
To be one of the most respected companies in India; recognized for challenging
conventions and delivering on our promises
Mission of ACC
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Leadership
Profitability
Growth
Quality
Equity
Pioneering
Responsibility
marketing network.
Achieve a fair and reasonable return on capital by promoting productivity
throughout the company.
Ensure a steady growth of business by strengthening our position in the
cement sector.
Maintain the high quality of our products and services and ensure their
supply at fair prices.
Promote and maintain fair industrial relations and an environment for the
effective involvement, welfare and development of staff at all levels.
Promote research and development efforts in the areas of product
development and energy, and fuel conservation, and to innovate and
optimize productivity.
Fulfill our obligations to society, specifically in the areas of integrated
rural development and in safeguarding the environment and natural
ecological balance.
YEAR
Achievements
1936
1947
1955
1956
1961
1961
1965
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ACC Sindri uses waste material - calcium carbonate sludge -from fertilizer factory at
Sindri to make cement
Bulk Cement Depot established at Okhla, Delhi
Blast furnace slag, (a waste by-product from steel) from TISCO used at ACC Chaibasa
manufacture Portland Slag Cement.
Manufacture of Hydrophobic (waterproof) cement at ACC Khalari.
Manufacture of Portland Pozzolana Cement using naturally available materials. An Ecofriendly cements using an eco-friendly process.
to
ACC inducts use of pollution control equipment and high efficiency sophisticated
1966
electrostatic precipitators for its cement plants and captive power plants decades before it
becomes mandatory to do so.
1978
Introduction of the energy efficient pre-calcinations technology for the first time in India.
1982
1987
ACC develops a new binder, working at sub-zero temperature, which is successfully used in
the Indian expedition to Antarctica.
1992
1993
2001
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IMC Ramkrishna Bajaj National Quality Award - Gagal wins Commendation Certificate and
New Wadi Plant wins Special Award for Performance Excellence in the Manufacturing Sector,
2007.
National Award for outstanding performance in promoting rural and agricultural development
by ASSOCHAM
Sword of Honour - by British Safety Council, United Kingdom for excellence in safety
performance.
Indira Priyadarshini Vrikshamitra Award --- by The Ministry of Environment and Forests for
"extraordinary work" carried out in the area of afforestation.
FICCI Award --- for innovative measures for control of pollution, waste management &
conservation of mineral resources in mines and plant.
Subh Karan Sarawagi Environment Award - by The Federation of Indian Mineral Industries for
environment protection measures.
Drona Trophy - By Indian Bureau Of Mines for extra ordinary efforts in protection of
Environment and mineral conservation in the large mechanized mines sector.
Indira Gandhi Memorial National Award - for excellent performance in prevention of pollution
and ecological development
Vishwakarma Rashtriya Puraskar trophy for outstanding performance in safety and mine
working
Jamnalal Bajaj Uchit Vyavahar Puraskar - Certificate of Merit by Council for Fair Business
Practices
Greentech Safety Gold and Silver Awards - for outstanding performance in Safety management
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FIMI National Award - for valuable contribution in Mining activities from the Federation of
Indian Mineral Industry under the Ministry of Coal.
Rajya Sthariya Paryavaran Puraskar - for outstanding work in Environmental Protection and
Environment Performance by the Madhya Pradesh Pollution. Control Board.
National Award for Fly Ash Utilization - by Ministry of Power, Ministry of Environment &
Forests and Dept of Science & Technology, Govt of India - for manufacture of Portland
Pozzolana Cement.
Good Corporate Citizen Award - by Bombay Chamber of Commerce and Industry for working
towards an environmentally sustainable industry while pursuing the objective of creation of a
better society.
National Award for Excellence in Water Management - by the Confederation of Indian Industry
(CII)
ACC was the first recipient of ASSOCHAMs first ever National Award for
outstanding performance in promoting rural and agricultural development
activities in 1976.
Decades later, PHD Chamber of Commerce and Industry selected ACC as winner of
its Good Corporate Citizen Award for the year 2002.
Over the years, there have been many awards and felicitations for achievements in Rural
and community development, Safety, Health, Tree plantation, A forestation, Clean
Mining, Environment Awareness and Protection.
Corporate office:
Overseeing the companys rang of business; the Corporate Office is the central head
quarters of all business and human resource function located in Mumbai.
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ACC Subsidiaries:
1. Bulk Cement Corporation India Ltd (BCCI)
2. ACC Machinery Company Ltd (AMCL)
3. ACC Nihon Casting Ltd (ANCL)
Regional marketing offices :Offices at all major cities in India i.e Bangaluru , Bhopal, Chandigarh , Coimbatore ,
Kanpur, Kolkata, Mumbai, Pune , Secunderabad ,New Delhi & Patna.
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*2005
2006
2007
2008
2009
NET SALES
PBT
OPERATING
3,221
684
616
5,803
1,620
1,717
6,991
1,930
1,993
7,283
1,737
1,899
8,027
2,294
2,643
PROFIT
PAT
Capital
544
3,502
1,232
4,234
1,439
4,791
1,213
5,746
1,607
6,932
Employed
Basic Earnings
30.02
66.02
76.75
64.63
85.60
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Working capital means the part of the total assets of the business that change from one
form to another form in the ordinary course of business operations.
Concept of working capital:The word working capital is made of two words 1.Working and 2. Capital
The word working means day to day operation of the business, whereas the word capital
means monetary value of all assets of the business.
Working capital : Working capital may be regarded as the life blood of business. Working capital is of
major importance to internal and external analysis because of its close relationship with
the current day-to-day operations of a business. Every business needs funds for two
purposes.
* Long term funds are required to create production facilities through purchase of fixed
assets
such
as
plants,
machineries,
lands,
buildings
&
etc
* Short term funds are required for the purchase of raw materials, payment of wages, and
other day-to-day expenses.
. It is other wise known as revolving or circulating capital
It is nothing but the difference between current assets and current liabilities. i.e.
Working Capital = Current Asset Current Liability.
Businesses use capital for construction, renovation, furniture, software, equipment, or
machinery. It is also commonly used to purchase inventory, or to make payroll. Capital is
also used often by businesses to put a down payment down on a piece of commercial real
estate. Working capital is essential for any business to succeed. It is becoming
increasingly important to have access to more working capital when we need it.
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Current Assets
Cash in hand / at bank
Current Liabilities
Bills Payable
Bills Receivable
Sundry Creditors
Sundry Debtors
Outstanding expenses
Accrued expenses
Investors/ stock
Temporary investment
Prepaid expenses
Accrued incomes
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the amount of accounts receivable reasonable relative to sales? How rapidly are
receivables being collected? Which customers are slow to pay and what should be done
about
them?
doing
to
enhance
or
detract
from
our
credit
rating?
5. Accrued expenses and taxes payable: - These are obligations of our company
at any given time and represent a future outflow of cash.
Two different concepts of working capital are:
Balance sheet or Traditional concept:- It shows the position of the firm at certain point of
time. It is calculated in the basis of balance sheet prepared at a specific date. In this method
there are two type of working capital:
Gross working capital:- It refers to the firms investment in current assets. The sum of the
current assets is the working capital of the business. The sum of the current assets is a
41
quantitative aspect of working capital. Which emphasizes more on quantity than its quality,
but it fails to reveal the true financial position of the firm because every increase in current
liabilities will decrease the gross working capital.
Net working capital:- It is the difference between current assets and current liabilities or the
excess of total current assets over total current liabilities.
Working capital= current assets - current liabilities.
Net working capital: - It is also can defined as that part of a firms current assets which is
financed with long term funds. It may be either positive or negative. When the current assets
exceed the current liability, the working capital is positive and vice versa.
Operating cycle concept: - The duration or time required to complete the sequence of
events right from purchase of raw material for cash to the realization of sales in cash is
called the operating cycle or working capital cycle.
CASH
RAW MATERIAL
OPERATING
CYCLE
SALES
42
WORK IN PROGRESS
FINISH GOODS
TYPES OF
WORKING
CAPITAL
ON THE BASIS OF
B/S CONCEPT
GROSS WORKING
CAPITAL
NET WORKING
CAPITAL
ON THE BASIS OF
TIME
REGULAR
WORKING
CAPITAL
TEMPORARY
WORKING
CAPITAL
SEASONAL
WORKING
CAPITAL
SPECIFIC
WORKING
CAPITAL
43
PAYMENT TO
SUPPLIERS
DIVIDEND
DISTRIBUTI-ON
SIGNIFICAN--CE OF
WORKING CAPITAL
INCREASE
EFFECIENC-Y
INCREASE DEBT
CAPACITY
INCREASE IN FIX
ASSETS
The length of time for which raw material are to remain in stores before they are
issued for production.
The length of sales cycle during which finished goods are to be kept waiting for
sales.
44
Ratio
Formulae
Result
Interpretation
On average, we turn over the value of our
entire stock every x days. We may need to
Stock
Turnover
(in days)
Average Stock *
365/
=x
Cost of Goods
days
Sold
Receivables
Ratio
(in days)
=x
Sales
days
Payables
Creditors * 365/
Ratio
(in days)
Purchases)
=x
45
Total Current
Current
Ratio
Assets/
=x
Total Current
times
Liabilities
(Total Current
Assets Quick Ratio
Inventory)/
Total Current
Working
Capital
Ratio
=x
times
Liabilities
(Inventory +
Receivables Payables)/
Sales
Note:- Once ratios have been established for our business, it is important to track them
over time and to compare them with ratios for other comparable businesses or industry
sectors.
The working capital needs of a business are influenced by numerous factors. The
important ones are discussed in brief as given below:
46
48
Earning Capacity and Dividend policy:-Some firms have more earning capacity
than others due to the quality of their products, monopoly conditions etc. Such
firms with high earning capacity may generate cash profits from operations and
contribute to their capital. The dividend policy of a concern also influences the
requirements of the working capital. A firm that maintains steady high rate of cash
dividend irrespective of its generation of profits needs more capital than the firm
retains larger part of its profits and does not pay high rate of cash dividend.
Price Level Changes:-Generally, rising price level requires a higher investment
in the working capital. With increasing prices, the same level of current assets
needs enhanced investment.
Manufacturing Cycle:-The manufacturing cycle starts with the purchase of raw
material and is completed with the production of finished goods. If the
manufacturing cycle involves a longer period, the need for working capital would
be more. At times, business needs to estimate the requirement of working capital
in advance for proper control and management. The factors discussed above
influence the quantum of working capital in the business. The assessment of
working capital requirement is made keeping these factors in view. Each
constituent of working capital retains its form for a certain period and that holding
period is determined by the factors discussed above. So for correct assessment of
the working capital requirement, the duration at various stages of the working
capital cycle is estimated. Thereafter, proper value is assigned to the respective
current assets, depending on its level of completion.
Other Factors:-Certain other factors such as operating efficiency, management
ability, irregularities a supply, import policy, asset structure, importance of labor,
banking facilities etc. also influences the requirement of working capital.
Component of Working Capital Basis of Valuation: Stock of raw material Purchase cost of raw materials
49
Investment in current assets and the level of current liabilities have to be geared
quickly to change in sales. To be sure, fixed asset investment and long term
financing are responsive to variation in sales. However, this relationship is not as
close and direct as it is in the case of working capital components.
The importance of working capital management is effected in the fact that financial
manages spend a great deal of time in managing current assets and current liabilities.
Arranging short term financing, negotiating favorable credit terms, controlling the
movement of cash, administering the accounts receivable, and monitoring the inventories
consume a great deal of time of financial managers.
The problem of working capital management is one of the best utilization of a scarce
resource.
50
Thus the job of efficient working capital management is a formidable one, since it
depends upon several variables such as character of the business, the lengths of the
merchandising cycle, rapidity of turnover, scale of operations, volume and terms of
purchase & sales and seasonal and other variations.
CONSEQUENCES OF UNDER ASSESSMENT OF WORKING CAPITAL
o Growth may be stunted. It may become difficult for the enterprise to undertake
profitable projects due to non-availability of working capital.
o Implementation of operating plans may become difficult and consequently the
profit goals may not be achieved.
o Cash crisis may emerge due to paucity of working funds.
o Optimum capacity utilization of fixed assets may not be achieved due to non
availability of the working capital.
o The business may fail to honor its commitment in time, thereby adversely
affecting its credibility. This situation may lead to business closure.
o The business may be compelled to buy raw materials on credit and sell finished
goods on cash. In the process it may end up with increasing cost of purchases and
reducing selling prices by offering discounts. Both these situations would affect
profitability adversely.
o Non-availability of stocks due to non-availability of funds may result in
production stoppage.
CONSEQUENCES OF OVER ASSESSMENT OF WORKING CAPITAL
51
52
This is a major source for raising short-term funds. Banks extend loans to businesses to
help them create necessary current assets so as to achieve the
Required business level. The loans are available for creating the following current Assets:
Debtors
Banks give short-term loans against these assets, keeping some security margin.
The advances given by banks against current assets are short-term in nature and banks
have the right to ask for immediate repayment if they consider doing so. Thus bank loans
for creation of current assets are also current liabilities.
iii. Promoters Fund
It is advisable to finance a portion of current assets from the promoters funds. They are
long-term funds and, therefore do not require immediate repayment. These funds increase
the liquidity of the business.
Management of Inventory
Inventories constitute the most significant part of current assets of a large majority of
companies in India. On an average, inventories are approximately 60 % of current assets
in public limited companies in India.
Because of the large size of inventories maintained by firms maintained by firms, a
considerable amount of funds is required to be committed to them. It is, therefore very
necessary to manage inventories efficiently and effectively in order to avoid unnecessary
investments. A firm neglecting a firm the management of inventories will be jeopardizing
its long run profitability and may fail ultimately.
The purpose of inventory management is to ensure availability of materials in sufficient
quantity as and when required and also to minimize investment in inventories at
53
considerable degrees, without any adverse effect on production and sales, by using simple
inventory planning and control techniques.
Need to hold inventories: Transaction motive emphasizes the need to maintain inventories to facilitate
smooth production and sales operation.
Precautionary motive necessities holding of inventories to guard against the risk
of unpredictable changes in demand and supply forces and other factors.
Speculative motive influences the decision to increases or reduce inventory
levels to take advantage of price fluctuations and also for saving in re-ordering
costs and quantity discounts etc.
Objective of Inventory Management:The main objectives of inventory management are operational and financial. The
operational mean that means that the materials and spares should be available in
sufficient quantity so that work is not disrupted for want of inventory. The financial
objective means that investments in inventories should not remain ideal and minimum
working capital should be locked in it. The following are the objectives of inventory
management: To ensure continuous supply of materials, spares and finished goods.
To avoid both over-stocking of inventory.
To maintain investments in inventories at the optimum level as required by the
operational and sale activities.
To keep material cost under control so that they contribute in reducing cost of
production and overall purchases.
To eliminate duplication in ordering or replenishing stocks. This is possible with
the help of centralizing purchases.
To minimize losses through deterioration, pilferage, wastages and damages.
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To design proper organization for inventory control so that management. Clear cut
account ability should be fixed at various levels of the organization.
To ensure perpetual inventory control so that materials shown in stock ledgers
should be actually lying in the stores.
To ensure right quality of goods at reasonable prices.
To facilitate furnishing of data for short-term and long term planning and control
of inventory
Management of cash
Cash is the important current asset for the operation of the business. Cash is the basic
input needed to keep the business running in the continuous basis, it is also the ultimate
output expected to be realized by selling or product manufactured by the firm.
The firm should keep sufficient cash neither more nor less. Cash shortage will disrupt the
firms manufacturing operations while excessive cash will simply remain ideal without
contributing anything towards the firms profitability. Thus a major function of the
financial manager is to maintain a sound cash position.
Cash is the money, which a firm can disburse immediately without any restriction. The
term cash includes coins, currency and cheques held by the firm and balances in its bank
account. Sometimes near cash items such as marketing securities or bank term deposits
are also included in cash. Generally when a firm has excess cash, it invests it is
marketable securities. This kind of investment contributes some profit to the firm.
Management of Receivables
A sound managerial control requires proper management of liquid assets and inventory.
These assets are a part of working capital of the business. An efficient use of financial
resources is necessary to avoid financial distress. Receivables result from credit sales.
A concern is required to allow credit sales in order to expand its sales volume. It is not
always possible to sell goods on cash basis only. Sometimes other concern in that line
55
might have established a practice of selling goods on credit basis. Under these
circumstances, it is not possible to avoid credit sales without adversely affecting sales.
The increase in sales is also essential to increases profitability. After a certain level of
sales the increase in sales will not proportionately increase production costs. The increase
in sales will bring in more profits. Thus, receivables constitute a significant portion of
current assets of a firm. But for investment in receivables, a firm has to insure certain
costs. Further, there is a risk of bad debts also. It is therefore, very necessary to have a
proper control and management of receivables.
Needs to hold cash:
Receivables management is the process of making decisions relating to investment in
trade debtors. Certain investments in receivables are necessary to increase the sales and
the profits of a firm. But at the same time investment in this asset involves cost
consideration also. Further, there is always a risk of bad debts too.
Thus, the objective of receivable management is to take a sound
decision as regards investments in debtors. In the words of Bolton, S.E., the need of
receivables management is to promote sales and profits until that point is reached
where the return of investment in further funding of receivables is less than the cost
of
funds
raised
to
finance
that
additional
credit.
Working Capital Cycle
Cash flows in a cycle into, around and out of a business. It is the business's life blood and
every manager's primary task is to help keep it flowing and to use the cash flow to
generate profits. If a business is operating profitably, then it should, in theory, generate
cash surpluses. If it doesn't generate surpluses, the business will eventually run out of
cash and expire. The faster a business expands the more cash it will need for working
capital and investment. The cheapest and best sources of cash exist as working capital
right within business. Good management of working capital will generate cash will help
improve profits and reduce risks. Bear in mind that the cost of providing credit to
56
customers and holding stocks can represent a substantial proportion of a firm's total
profits.
There are two elements in the business cycle that absorb
cash - Inventory (stocks and work-in-progress) and Receivables (debtors owing our
money). The main sources of cash are Payables (our creditors) and Equity and Loans.
Each component of working capital (namely inventory, receivables and payables) has two
dimensions ........TIME ......... and MONEY. When it comes to managing working capital
- TIME IS MONEY. If we can get money to move faster around the cycle (e.g. collect
monies due from debtors more quickly) or reduce the amount of money tied up (e.g.
reduce inventory levels relative to sales), the business will generate more cash or it will
need to borrow less money to fund working capital. As a consequence, we could reduce
the cost of bank interest or we'll have additional free money available to support
additional sales growth or investment. Similarly, if we can negotiate improved terms with
suppliers e.g. get longer credit or an increased credit limit; we effectively create free
finance to help fund future sales.
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If we.......
Collect receivables (debtors) faster
Then......
We release cash from
the cycle
resources
We free up cash
We consume more
cash
It can be tempting to pay cash, if available, for fixed assets e.g. computers, plant, vehicles
etc. If we do pay cash, remember that this is now longer available for working capital.
Therefore, if cash is tight, we should consider other ways of financing capital investment
- loans, equity, leasing etc. Similarly, if we pay dividends or increase drawings, these are
cash outflows and, like water flowing downs a plug hole, they remove liquidity from the
business.
More businesses fail for lack of cash than for want of profit.
Sources of Additional Working Capital:
Long-term loans
If we have insufficient working capital and we try to increase sales, we can easily overstretch the financial resources of the business. This is called overtrading. Early warning
signs include:
58
Exceptional cash generating activities e.g. offering high discounts for early cash
payment
Management pre-occupation with surviving rather than managing Frequent shortterm emergency requests to the bank (to help pay wages, pending receipt of a
cheque).
Handling Receivables (Debtors)
Cash flow can be significantly enhanced if the amounts owing to a business are collected
faster. Every business needs to know.... who owes them money.... how much is owed....
how long it is owing.... for what it is owed.
Late payments erode profits and can lead to bad debts.
If we don't manage debtors, they will begin to manage our business as we will
gradually lose control due to reduced cash flow and, of course, we could experience an
increased incidence of bad debt.
The following measures will help manage our debtors:
1. Have the right mental attitude to the control of credit and make sure that it gets
the priority it deserves.
2. Establish clear credit practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff, suppliers and
customers.
4. Be professional when accepting new accounts, and especially larger ones.
5. Check out each customer thoroughly before we offer credit. Use credit agencies,
bank references, industry sources etc.
59
60
important than getting paid for our product or service. A customer who does not pay
is not a customer.
Managing Payables (Creditors)
Creditors are a vital part of effective cash management and should be managed carefully
to enhance the cash position.
Purchasing initiates cash outflows and an over-zealous purchasing function can create
liquidity problems. Consider the following:
Do we have alternative sources of supply? If not, get quotes from major suppliers
and shop around for the best discounts, credit terms, and reduce dependence on a
single supplier.
If a supplier of goods or services lets we down can we charge back the cost of the
delay?
There is an old adage in business that if we can buy well then we can sell well.
Management of our creditors and suppliers is just as important as the management of our
debtors. It is important to look after our creditors - slow payment by we may create illfeeling and can signal that our company is inefficient (or in trouble!).
61
Remember, a good supplier is someone who will work with us to enhance the future
viability and profitability of our company.
Common-size statements are used primarily for comparative purposes so that firms of
various sizes can be equated. Also called one hundred percent statement.
Advantages: The statement reveals the sources of funds & the distribution or application of the
total funds in the asset of a business enterprise.
Comparison of the common size statement over a number of years will clearly
indicate the changing proportion of the various components of assets, liabilities,
cost, net sales & profits.
It will assist corporate evaluation & ranking.
Limitations: It doesnt show variations in the different account items from period to period.
Less useful due to lack of established standard proportion of an asset to the total
asset & so on.
Common size statement analysis of ACC cements Ltd. from 2012-2016
2012 (%)
2013(%)
2014(%)
2015(%)
2016(%)
SOURCES OF FUNDS:
Shareholders Funds:-
Loan Funds:
44.36
20.91
9.47
8.39
8.18
8.68
7.32
6.69
5.84
5.04
100
100
100
100
79.48
11.50
9.00
80.03
17.06
2.92
88.29
11.82
(0.11)
91.08
21.28
(12.37)
0.02
0.00
0.00
0.00
(Net)
TOTAL FUNDS
100
APP. OF FUNDS:--Fixed Assets: 84.16
Investments:9.60
Net Current Assets( Curr 5.62
Assests-
current
0.61
100
100
100
100
100
64
SOURCES OF FUNDS:
2013*
2014
2015
2016
Rs.
(Crore)
Shareholders Funds:-
100
132.06
156.79
191.42
Loan Funds
100
51.21
52.62
61.9
100
103.4
104.7
108.9
TOTAL FUNDS
100
113.1
131.2
158.3
Fixed Assets
100
113.9
145.7
181.4
Investments
503.5
167.8
134.9
293.1
100
114.7
143.6
119.4
100
134.8
181.1
206.4
0.00
0.00
APP. OF FUNDS:-
--(Less):-Current Liabilities
&Prov.
MISC EXP.
(to the extent not written off
65
100
0.00
or adjusted)
TOTAL ASSETS (Net)
100
113.1
131.2
158.3
Working Capital calculation:Statement showing change in working capital for ACC Ltd:( Rs.in Crore)
Particulars
Current Assets
Inventories
Sund. Debtors
Cash & Bank Bal
Loan & Advances
Other CA
Total ( A )
Dec16
Dec15
778.98
203.70
746.38
554.42
10.99
2294.47
793.27
310.17
984.24
651.28
20.67
2759.63
2060.34
1091.88
3152.22
1801.79
963.93
2765.72
Increase ( + )
(14.29)
(106.47)
(237.86)
(96.86)
(9.68)
Current Liabilities
C.L.
Provisions
Total ( B )
66
Decrease (- )
258.55
127.95
( A-B )
Changes in
(857.75)
(6.09)
(851.66)
(851.66)
(465.16)
(465.16)
working capital
Total
(857.75)
(857.75)
(465.16)
(465.16)
Similarly the calculation of WC for the year 2012 to 2016 as given below:(Rs.in Crore)
(A)Current assets
(B)Current
2012
1,421
1,335
2013
1,921
1,672
2014
2,203
2,221
2015
2,760
2,766
2016
2,294
3,152
Liabilities
Working capital
86
249
(18)
(6)
(858)
Interpretation:-While looking into the changes, we will look into the various
components of working capital & analyze the changes in that.
INVENTORY ANALYSIS
67
By analyzing the 5 years data we can see that the value of inventories is increasing over a
no of year. It indicates that the company is growing rapidly in cement sector. A company
uses inventory when they have demand in market. From other point of view we can say
that the liquidity of firm is blocked in inventories but it is important to keep stocks due to
uncertainty of availability of raw material in time.
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Debtors will arise only when credit sales are made. The above graph depicts that there is
continuous rise in the debtors of ACC Ltd in the successive years other than 2009.. It
represents an extension of credit to customers. The reason for increasing credit is
competition and company liberal credit policy.
Cash & Bank Bal, Loans & adv ANALYSIS:-
Significant increase in Cash & bank balance, which shows the financial strengths
of the company. Though there is a slight fall in the FY 2016 . Cash is basic input
or component of working capital. Cash is needed to keep the business running on
a continuous basis. So the organization should have sufficient cash to meet
various requirements.
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After analyzing the table, we can say that the pattern of loans & advance is not
static in nature. It shows upwards & downwards movement as the requirements
influence it.
CURRENT LIABILITIES & PROVISIONS ANALYSIS:-
After analyzing the bar-chart, we can say that the amount of current liabilities is
increasing significantly over years .An increase current liabilities indicates that
company is using its credit facilities to the maximum extent for operating
purpose.
From the above table we can see that provision shows an increasing trend and the
huge amount is being kept in these provisions. This is kept to pay the taxes,
interest & other facilities or benefits to the employee. It is just kept for meeting
future short-term liabilities.
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RATIO ANALYSIS
(A) Overview:Financial ratios are measures of the relative health, or sometimes the relative sickness of
a business. A physician, when evaluating a persons health, will measure the heart rate,
blood-pressure and temperature; whereas, a financial analyst will take readings on a
companys growth, cost control, turnover, profitability and risk. Like the physician, the
financial analyst will then compare these readings with generally accepted guidelines.
Ratio analysis is an effective tool to assist the analyst in answering some basic questions,
such as:1. How well is the company doing?
2. What are its strengths and weaknesses?
3. What are the relative risks to the company?
Although an analysis of financial ratios will help identify a companys strengths
and weaknesses, it has its limitations and will not necessarily provide the solutions or
cures for the problems it identifies.
B. APPLICATION OF RATIO ANALYSIS:Integral tool in trend analysis
Compares the companys own ratios to itself over time
Identifies the companys strengths and weaknesses
Assists in establishing appropriate capitalization rates (helps to identify risk
factors particular to the subject company)
WORKING CAPITAL RATIOS AND ITS INTERPRETATION :Dec12
Liquidity Ratio
71
Dec13
Dec14
Dec15
Dec16
Current Ratio
0.58
0.77
0.86
0.89
0.67
Quick Ratio
0.42
0.61
0.55
0.61
0.42
Solvency Ratio
Debt-equity ratio.
0.50
0.25
0.07
0.10
0.09
Interpretation: - As we know that ideal current ratio for any firm is 2:1.The current
ratio of company is less than the ideal ratio. This depicts that companys liquidity
position is not sound. Its current assets are less than its current liabilities.
Generally a QR of 1:1 is considered to represent satisfactory current financial
position. The trend of quick ratio is uneven & the ratio is around 0.5:1 over a
period of time. A quick ratio is an indication that the firm is liquid and has the less
confidence to meet its current liabilities in time. This shows company has
liquidity problem.
Debt-equity ratio shows relationship between borrowed funds and owners capital
is a popular measure of the long term financial solvency of the firm. For ACC it
was the highest around 0.5:1 in 2012.After that it shows fluctuation.
Activity/mgmt efficiency Ratio:Dec,12
Inventory Turnover 5.37
Dec13
9.33
Dec14
24.85
Dec15
27.51
Dec16
25.22
Ratio
Debtor
27.75
27.40
24.12
31.22
Ratio
72
Turnover 16.34
22.40
24.85
27.51
25.22
(6.96)
(18.25)
(17.02)
(54.17)
Ratio
Work cap turn.
(27.93)
It shows increasing trend which is favorable for the company. As it indicates how
rapidly the inventory is turning into receivable through sales. A high ratio is good
from the view point of liquidity. A low ratio would signify that inventory does not
sell fast.
A high ratio is indicative of shorter time lag between credit sales and cash
collection. The higher the value of debtors turnover the more efficient is the
management of debtors or more liquid the debtors are. A low ratio shows that
debts are not being collected rapidly. As the graph reveals that the debts are
collected in time & the process is improving consistently. This shows that
company is utilizing its debtors efficiently as compare to previous year.
This ratio indicates high net working capital requires for sales. This company
having negative working capital because, they have more current liabilities over
current assets. It shows that the short term loans are not sufficient and more
73
money are invested in the purchase of fixed assets. Thus this ratio is helpful to
forecast the working capital requirement on the basis of sale.
Dec,12
Dec13
Dec14
Dec15
Dec16
17.32
28.97
23.72
20.59
27.68
16.85
21.16
20.44
16.29
19.69
10.00
10.00
10.00
10.00
10.00
8.00
15.00
20.00
20.00
23.00
Investment
Valuation Ratio
Face value
Dividend per Share
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As it shows the dividend per share ratio is increasing over years. It means that the
investors have faith in the company.
G/P margin ratio shows the profit relative to sales. A high ratio of gross profits
to sales is a sign of good management as it implies that the cost of production of
the firm is relatively low. For ACC it is uneven but it was good in FY13 &
FY16.
The net profit margin is indicative of management ability to operate the business
with sufficient success not only to recover from revenues, but also to leave a
reasonable margin to the owners. A high net profit margin would ensure
adequate return to the owners as well as enable a firm to face adverse economic
conditions. It is significant & satisfactory for the company.
Suggestion: It is suggested that the company has to increase its current assets to meet its
short-term obligations.
Company has to improve debtors collection period continuously so that
effective receivable management will possible.
Reserves should be utilized for the growth of the company.
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While forecasting cash flow, the management should take into account the
impact of unforeseen events, market cycles and actions by competitors. The
effect of unforeseen demands of working capital should be factored in.
Collaborating with the customers & suppliers instead of being focused only on
own operations will also yield good results. If feasible, helping them to plan
their inventory requirements efficiently to match their production with their
consumption will help reduce inventory levels.
Bibliography
www.google.com
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INVESTOPEDIA.com
www.Moneycontrol.com
www.cmaindia.org
www.acclimited.com
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