TABEL OF CONTENTS

CONTENTS
PAGE NO

CHAPTER-1. COMPANY PROFILE 1-14

➢ COMPANY OVERVIEW

➢ HISTORY

➢ HISTORY MILESTONES

➢ MISSION AND VISION

➢ BUSINESS PHILISOPHY

➢ RESEARCH TECHENOLOGY

➢ OBJECTIVES OF COMPANY

➢ ORGANIZATION STRUCTURE

➢ GROUP COMPANIES
➢ PRODUCTION PROCESS
➢ AWARDS AND RECOGNISATION
➢ SWOT ANALYSIS

CHAPTER-2. CONCEPTUAL FRAMEWORK 15-42

➢ RATIO ANALYISIS

➢ ADVANTAGE

➢ LIMITATION

➢ CLASSFICATION

➢ CONCLUSION

CHAPTER-3 RESEARCH METHDOLOGY 43-46

➢ THE STUDY

➢ THE TOOLS OF DATA COLLECTION

➢ OBJECTIVE OF STUDY

➢ LIMITATIONS OF STUDY

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 ➢ RECOMMENDATIONS

PREFACE

No study can be termed complete if there is no practical experience. Hence need for
training has become a real necessity. The training aim to prepare students through
a process of practical experience. Practical exposure no doubt has contributed a
significant amount of knowledge to me along with real life experience &was an ideal
combination of academic knowledge & practical experience. I am sure will go a long
way in my future endeavors.

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 ACKNOWLEDGMENT

Preparing a report is an arduous task and I was fortunate enough to get support
from a large number of persons to whom I shall always remain grateful.

I would like to record my gratitude to Mr.M.K.Meashwary for allowing me to take

this project report.

I take this opportunity to thanks Dr. rakesh soral Sir, coordinator of, Indira
Gandhi National Open University for providing us good atmosphere in the
institute.

Last but not the least, I would also like to thanks to Dr.D.C.Jain under his
supervision I have done training all the respondents for giving their precious time
and relevant information and experience.

(Vikas
Sharma)

M.B.A
V-SAM

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 DECLARATION

I Vikas Sharma M.B.A V semester from indira Ghandhi National Open University,
Delhi. I hereby declare that the project report entitled “A study of profitability
Analysis at Magalam Cement Ltd. ” is a piece of genuine work done under the
supervision of Mr. R.C.Gupta Mangalam Cemet ltd kota.The empirical finding in this
report are based on the information collected by the company finance report. The
project accomplished for the partial fulfillment of the Post Graduate Diploma in
Management for Financial Management.

Place: Delhi Vikram

Sharm

Date
M.B.A. V-Sem

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 CERTIFICATE

I certify that Mr.Vikram Sharma has completed his summer training in Mangalam Cement..Ltd,
Morak in the area of Finance. His project title is “A study of Profitability analysis at
Mangalam Cement Ltd.” He has completed his summer training report under my supervision
and guidance.

DATE: Prof.D.C.Jain
PLACE:Gr.Noida ( Faculty Guide & Placement officer)

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 Cement

Introduction

In the most general sense of the word, cement is a binder, a substance which
sets and hardens independently, and can bind other materials together.
Cement used in construction is characterized as hydraulic or non-hydraulic.
Hydraulic cements (e.g. Portland cement) harden even underwater or when
constantly exposed to wet weather while non-hydraulic cements (e.g. lime
and gypsum plaster) must be kept dry in order to gain strength.

The most important use of cement is the production of mortar and concrete
used by the construction and real estate sectors. The world production of
hydraulic cement is dominated by China (1.2 billion MT), followed by India
and Brazil, with these 3 countries contributing to over half of global
production. There are a number of employment opportunities within the
sector such as site engineer, packaging engineer, surveyor, geologist,
contractor, and supervisor amongst others.

Typically, the industry is characterized by few large players due to the high
entry barriers such as economies of scale, high capital requirements, long
gestational period of over 3 years and the need for capacity augmentation in
large increments. These producers tend to have high bargaining power due
to their limited numbers and the lack of any substitutes for their product,
which is quintessential for secondary industries. The largest global players
are Lafarge (France), Holcim (Switzerland) and Cemex (USA).

Performance
India is the world’s 2nd largest producer of cement after China with an
industry capacity of over 200 MT. The cement industry in India is one
amongst the fastest growing sectors due to the rapid development of
infrastructure and real estate projects in the country, with 2008’s domestic
consumption growing ~10% YoY. The Southern and Central regions saw
maximum consumption growth (~16% and ~14% respectively) whereas the
North and Eastern lagged behind, with lacklustre growth (~4% and ~2%
respectively).

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The industry consists of both the organized sector and the unorganized
sector. The largest organized sector companies include Ambuja Cements Ltd,
J.K Cement Ltd, Grasim Industries Ltd, Associated Cement Company Ltd
(ACC) and Madras Cement Ltd. while the main players of the unorganized
sector are the regional and local cement producing units across various
states. Some of the states where the cement industry is booming are
Gujarat, Madhya Pradesh, and Rajasthan.

The significant growth trajectory of the industry has attracted a lot of foreign
interest in the recent few years, with Holcim increasing its stake in Ambuja
Cement from 22% to 56% and leading foreign funds investing in a 7.5%
stake in India’s 3d largest cement company, India Cements (ICL) valued at
US$125 million.

Growth Potential
Prospects for the industry remain bright over the coming years, given India’s
dominance of global markets and relatively low cost of production. Also, the
overall economic prosperity of the country, with a burgeoning middle class,
growing infrastructure demand, significant technological change and
increasing government spending all bode well for the future. On the flip side,
some caution has to be maintained due to the current demand- supply gap
leading to over capacity and falling margins and prices. Also, given the close
linkages between them, the effect of a slowdown in global real estate and
infrastructure demand or hike in interest rates should also be evaluated.

Future Prospects
According to the recent surveys, one metric ton of cement generates job
opportunities for around 1.4 million people. In most cases, one needs to have
some type of expertise in architecture in order to get a good job in this
sector. Given that most of the jobs for qualified graduates have a good pay
package with other benefits and perks coupled with positive growth
prospects, working in the cement industry is considered a lucrative career
option for new graduates, especially for those with an interest in
architecture.

It is believed that in the coming years, more than 2.5 million people will be
directly employed by cement companies. To cater to this growing demand, a
number of colleges and educational institutes have introduced various

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courses and study programs related to the cement industry such as a ‘Post
Graduate Diploma in Cement Technology’.

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 HISTORY

Profile
Mangalam Cement Limited was promoted in the year 1978 by the famed
House of Shri B.K.Birla, the most eminent and illustrious industrialist of the
country. It is a professionally managed and well established cement
manufacturing company enjoying the confidence of consumers because of its
superior quality product and excellent customer service.
The company has recently commissioned its state-of-the-art new cement
plant with German technology for producing 7 lakh tonnes per annum at its existing site at
Morak, Distt. Kota in Rajasthan under the name of Neer Shree Cement.

Management
An eminent Board of Directors runs the company with proven professional acumen.

1 Sh. O.P. Gupta Chairman

.

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 2 Sh. Anshuman Vikram Jalan Director
.

3 Smt. Vidula Jalan Director

.

4 Sh. N.G.Khaitan Director

.

5 Sh. K.K.Mudgil Director

.

6 Sh. T.S. Vishwanath Director

.

7 Sh. K.C. Jain Managing Director

.

Key Management Personnel

In any company there are various levels of management that make it possible to run the
company successfully. At Mangalam also the following levels of Management Team are
making it possible to keep the company on the top amongst various other cement
companies.

1. Mr. R.C. Gupta President & Company Secretary

2. Mr. S.S. Jain President (Works & Projects)

3. Mr. A.K. Uppal President (Marketing)

4. Mr. Yaswant Mishra Sr. Joint President

5. Mr. S.K. Agrawal Joint President (Technical)

6. Mr. Anil Mandot Sr. Vice President (A & T)

7. Mr. V. Raghupati Vice President (Power Plant)

8. Mr. R. Giri Vice President (Elect. & Instrumenation)

9. Mr. R.K.Sodhani Vice President (Production)

10. Mr. G.S.Chandak Vice President (Sales & Sales Accounts)

11. Mr. S.S. Oswal Vice President (Civil)

12. Mr. Anoop Walia Vice President (Marketing)

13. Mr. G.S.Nathawat Astt. Vice President (Stores)

14. Mr. J.R.Mehta Astt. Vice President (Purchase)

15. Mr. S.D. Mishra Astt. Vice President (Mechanical)

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 16. Mr. S.B. Sharma Astt. Vice President (Mines)

17. Mr. N.K. Maheshwari Astt. Vice President (Personnel)

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1
 Company History - Mangalam Cement

YEAR EVENTS

1976 - The company was incorporated on 27th October. The company was
promoted by Kesoram Industries & Cotton Mills Ltd. The Century Spinning &
Mfg. Co. Ltd., The Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., and Pilani
Investment Corporation Ltd., Rajasthan State Industrial & Mineral
Development Corporation Ltd. (RIMC) also participated in the promoters
capital. The Company manufacture portland cement by dry process.

1979 - 16 Equity shares subscribed for by the signatories to the

Memorandum and Articles of Association. 20,000 Pref. and 57,99,984 No. of
equity shares issued at par through a prospectus. Out of this the following
shares were reserved for allotment: 20,000 Pref. and 4,00,000 No. of equity
shares to Rajasthan State Industrial & Mineral Development Corporation, Ltd.
(RIMDC); 11,19,984 No. of equity shares to Kesoram Industries & Cotton
Mills, Ltd., its directors, etc. 6,00,000 No. of equity shares to The Century
Spg. & Mfg. Co. Ltd., 3,50,000 No. of equity shares to Pilani Investment
Corpn. Ltd., and 2,50,000 No. of equity shares to the Gwalior Rayon Silk Mfg.
(WVG.) Co. Ltd., 30,80,000 No. of equity shares offered for public
subscription during December 1978. Pref. shares redeemable during
27.2.1991/94 at 6 months notice.

1985 - 10,00,422 shares issued at par to Financial Institutions on

conversion of loans. 200 forfeited shares reissued or forfeiture on them
annulled.

1986 - Forfeiture on 150 No. of Equity shares annulled. Allotted 2,77,965

No. of equity shares to ICICI and 33,344 No. of equity shares to GIC and its
subsidiaries both at par in part conversion of loans.

1987 - The Production suffered a set back and declined slightly due to
heavy power cut and shortfall in the availability of wagons fo cement
despatches.

- To tide over the shortage of power, the Company installed Diesel

generator sets.

- The Company evaluated the offers received for supply of plant and
machinery for expansion of capacity from 4,00,000 tonnes per annum to
6,00,000 tonnes per annum.

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 - The Company examined the feasibility of setting up a new plant of
2,000 tonnes per day capacity so as to derive maximum benefit of energy,
coal and other costs.

1988 - Buildings, plant, machinery and railway siding of the Company were
revalued as on 1st January.

1989 - Production of cement declined to 3,71,658 tonnes on account of

plant shutdown for 37 days in the month of April/May. The Japanese
generating set with a capacity of 5.4 MW was commissioned during the year.

- The Company decided to instal a new grassroot plant of 6 lakh TPA

capacity at the existing site.
- 5,300 forfeited equity shares reissued.

1992 - The Company issued 42,67,038 No. of equity shares of Rs 10 each at

a premium of Rs 50 per share on rights basis in the prop. of 3:5. All were
taken up. Allotment of 16,890 shares were kept in abeyance pending
litigation.

- Another 50,000 No. of equity shares of Rs 10 each at a premium of Rs

50 per share were offered to the employees. Only 4,700 share taken up.
The balance 45,300 shares were allowed to lapse.

1994 - 35,00,000 No. of Equity shares of Rs 10 each (Prem. Rs 75 per

share) allotted to Financial Institutions and Mutual Funds on private
placement basis.

1996 - Severe power cut resulted in closure of Mangalam Cement Kiln for
the month of December.

1997 - Performance of the company was affected due to sluggish market

conditions and unremunerative realisations. Price of cement was under
pressure throughout the year as supply was far in excess of demand due to
addition of new capacities and poor purchases by the Government.

- The Company proposed to expand the plant capacity by installing a pre-

calcinator.

- The Company received a letter of intent to increase the Capacity from

4,00,000 tonnes per annum to 6,00,000 tonnes per annum.

- The Company had applied for letter of intent to manufacture acrylic

fibre and acrylonitrile.

- The Company decided to import a D.G. set of 5.4 MW from Japan.

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 Application was also made for a letter of intent to manufacture toluene-
di-isocynate, used for the manufacture of flexible town glass, moulded
flexible looms and for paints, coating and adhesives.

1998 - The Company issued 133,80,179-14% optionally convertible

cumulative preference shares on rights basis in proportion 1:1.
These shares are optionally convertible into equity shares on the expiry
of third, fourth and fifth year from the date of allotment i.e. 5th November.
Shareholders not opting for conversion within the said period would be
eligible for redemption at par at the end of 60th month from the date of
allotment.

2000 - The networth of the company has been totally eroded and it has
become a sick company (under SICA, 1985)

2004 -Receives Rs 119 cr dues waiver under One Time Settlement (OTS)
deal with nine of the company's eleven lenders

2009 - Mangalam Cement Ltd has informed BSE that the Board of Directors
of the Company at its meeting held on July 30,2009,appointed the following
two Additional Directors on the Board of the Company with immediate effect.

(i) Shri. Anshuman Vikram Jalan, Kolkata

(ii) Smt. Vidula Jalan, Kolkata.

- Mangalam Cement Ltd has informed that the Board of Directors of the
Company at its meeting held on July 30, 2009, appointed the following two
Additional Directors on the Board of the Company with immediate effect.(i)
Shri. Anshuman Vikram Jalan, Kolkata (ii) Smt. Vidula Jalan, Kolkata.

Vision & Mission

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Mangalam mission expression has been crafted to envelope both extant and emerging
realities:

“To delight and deliver beyond expectation through ingenious strategy, intrepid
entrepreneurship, improved technology, innovative products, insightful marketing and inspired
thinking about the future.”

A breakdown of the statement above reveals a ‘means and end’ approach, where the end is
articulated at the beginning with the means linked to it.

This segment not only underlines the importance of the ultimate goal - customer
satisfaction (‘delight’) and ultimate target - the customer, but also of intermediate
processes and principals, which have contributed to building a robust, dependable.

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OBJECTIVES

➢ To Minimize the Accidents.

➢ To control the waste.
➢ To minimize the defect.
➢ To control the breakdowns.
➢ To see the consumer complaints will be zero.
➢ To keep the environment pollution free.
➢ Maximize capital utilization.
➢ Increase production capacity.
➢ Increase plant availability.
➢ Improve environmental programmed.
➢ Minimize indirect and direct loses.
➢ Compliance with relevant legislation and regulation.
➢ Efficient use of resources.
➢ Effective use of all employees.
➢ Training for all.
➢ Ensure empowerment and improvement of department.
➢ Establish the sustain document quality management system.

Continually improvement in process, product, and profitability.

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 Organizational Structure Of Mangalam
Cement

M.D.

President

Joint President

Sen.Vice President

Vice President

D.Genral Manager

Personnal Instrument Electrical Store Accounts

Manager

Asst. Manager

Officer

Assist.Officer

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 FINACIAL PERFORMANCE-

Abridged Profit and loss statement {Non –consololidated}

All figures in
Rs.Crore

2009- 2008- 2007- 2006- 2005-

2010 2009 2008 2007 2006

68183. 64631. 59689.

Gross Sales 82 05 31
6814.7 8216.1 8599.2
less : Excise Duty 4 2 3
61369. 56414. 50987. 22799.
Net Sales 08 93 89 42
Operating Profit before interest and Financial 21145. 16200. 16049.
Charges,Depreciation and tax 35 86 8 6959.3
Less : Interest and Financial Charges 196.16 317.66 294.67 64.5
20949. 15883. 15755.
Gross Profit before Depreciation and tax 19 2 16 6894.8
2535.9 2426.9 1770.2
Less : Depreciation (net of transfer from revaluation reserve) 6 5 5 608.26
18413. 13456. 13984. 6286.5
Profit after Depreciation 23 25 91 4
Less : exceptional Items
Less/Diminution on sale of Investment 255.57
18413. 13200. 13984. 6286.5
Profit before Tax 23 68 91 4
2629.9 2093.6
Less : provision for tax 4 7
3449.6
(a) Income Tax 6700.2 3
(b) Deferred Tax Assets -168
© Fringe Benefit Tax 34.65
11881. 11354. 4192.8
Net Profit after Tax 03 9716.4 97 7
provision for Dividend for 73.67
Corporate Dividend Tax provided in last year written back 12.52
20655. 14742.
Profit brought forward from previous year 42 88
Profit available for appropriation 32622. 24459.

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 64 28
APPROPRIATIONS
(A) Transfer to general Reserve 1200 2000
1601.6 1541.8
(b) Proposed Dividend on Equity Shares 3 3
(c) Corporate Dividend Tax 266.01 262.03
20655.
(d) Balance carried forward to next year 29555 42
32622. 24459.
TOTAL 64 28

Period ending F.Y F.Y F.Y F.Y F.V

(months)
2005 2006 2007 2008 2009

Net sales

Other Income

Total Income

Cost of goods sold

OPBDIT

PAT

Gross Block

Equity capital

EPS (Rs.)

DPS (Rs.)

BV (Rs.)

P/E range (x)

Debt / Equity (x

Operating margin (%
of OI)

Net margin (% of OI)

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1
1
 CONCEPTUAL FRAMEWORK

RATIO:

It is the mathematical relation between two quantities in from of fraction or percentage.

Ratio on its own has no meaning. Absolute figures are valuable but they standing alone convey
no meaning unless compared with another. These single figures become important when studied
in relation to other figures. Such relationship of accounting information given in terms of money
are commonly referred to as ratio so, ratio is one figure expressed in terms of another, it is an
expression of relationship between one figure and the other figure which are mutuality
interdependent.

R.N.Anthony-“A ratio is Simple one number expressed in terms of another it is found by

dividing one number into another.

Ratio may be expressed in the following three ways:-

(1) Pure Ratio or Simple Ratio: - In this form, the relationship between
two figures is expressed in a common denominator. It is obtained by the simple
division of one number by another so that the proportionate relationship becomes
clear. For example, 2:1, 1:1, 5:6 etc.
(2) Rate Or So Many Times:- In this form, a ratio is calculated between
two numerical fact for which one item divided by another and the quotient is
taken as unit of expression when ratio is expressed in this form, it is called as
‘turnover’ and is written in ‘times’. For example, 4 times, 5 times, 6 times etc.
(3) Percentage:- In this form, the relationship between two items is expressed in
percentage for which one item is divided by another and the quotient is
multiplied by one hundred. For example, 25%, 50%

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RATIO ANALYSIS;-

SIGNIFICANCE OF RATIO ANALYSIS;- Financial ratio analysis is the calculation

and comparison of ratios which are derived from the information in a company’s financial
statements.

Financial ratios are calculated from one or more prices of information from a company’s
financial statements. A financial ratio can given a financial analyst an excellent picture of a
company’s situation and the trends that are developing.

Credit analysts, those interpreting the financial ratios from the prospects of a lender, focus on the
“downside” risk since they gain none of the upside from an improvement in operations. They pay
great attention to liquidity and leverage ratio to ascertain a company’s financial risk. Equity
analysts look more to the operational and profitability ratios, to determine the future profits that
will accrue to the shareholder.

Although financial ratio analysis is well-developed and the actual ratios are well-known,
practicing financial analysts often develop their own measures for particular industries and even
individual companies. Analysts often differ drastically in there conclusions from the same ratio
analysis.

The significance of a ratio can only truly be appreciated when:-

• It is compared with other ratios in the same set of financial statements

.

• It is compared with the same ratio in previous financial statements (trend analysis)

• It is compared with a standard of performance (industry average). Such a standard a

standard may be either the ratio which represents the typical performance of the trade or
industry, or the ratio which represents the target set by management as desirable for the
business.

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ADVANTAGES OF RATIO ANALYSIS;-

Financial statement like profit and loss account and balance sheet are prepared at the end of the
year do not always conveys to the reader the real profitability and financial health of the
business. They contain various fact and figures and it is for the reader to conclude, whether these
facts indicate a good or bad managerial performance. Ratio analysis is the most important tool of
the analysis these financial statements. The figures then speak of liquidity, solvency by a
profitability etc., of the business enterprices.Some important object and advantage derived by a
firm by the use of accounting ratios are:-

 Helpful in analysis of financial statement.

 Simplification of accounting data.

 Helpful in comparative study.

 Helpful in locating the weak spots of the business.

 Helpful in forecasting.

 Estimation of ideal standards.

 Fixation of ideal statement.

 Effective control

 Study of financial soundness.

LIMITATIONS OF RATIO ANALYSIS:-

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Ratio analysis is a very important tool of financial analysis. But despite It’s being indispensable,
the ratio analysis suffers from a number of limitations. These limitations should be kept in mind
while making use of the ratio analysis.

 False accounting data gives false ratios.

 Comparison not possible if different firms adopt different accounting policies.

 Ratio analysis becomes less effective due to price level change.

 Limited use of a single ratio.

 Window dressing.

 Lack of proper standards

 Ratio alone is not adequate for proper conclusion.

CLASSFICATION OF RATIO:-

1
 According ratios or financial ratio has been classified in various ways according to
different purposes in view. However, we shall discuss the classification according to
annual financial statement and according to annual financial statement and according to
objectives.

A.Classfication of the ratio on the basis of financial statement.:-Ratio is

calculated on the basis of information given in the financial statement, which is as
follows:

1.Balancesheets Ratio or position Statement ratios:.-These are the ratios which explain
The numerical relationships between two figures in the balance sheet, e.g,the ratio of
current assets or current liabilities or the ratio between capital and total assets. This is
also called financial ratio. The most common amongst the balance sheet ratio are:

• CURRENT RATIO

• LIQUID RATIO OR ACID TEST RATIO

• PROPERIETARY RATIO

• CAPITAL GEARING RATIO

• FIXED ASSETS TO CURRENT ASSETS RATIO

2.Income statement Ratio or Profit and Loss Account Ratios:-These explain the numerical
relationships between two items of group of items of the P & L A/C. The item should refer to the
same statement. The more common Ratio under these head are.

• OPERATING RATIO

• GROSS PROFIT RATIO.

• NET PROFIT RATIO

• EXPENSES RATIO

• STOCK TURNOVER RATIO

3. Composite Ratio:-These ratios are based on the figure of the postions.Statement as well as
income statement e.g. .
• Fixed assets.

• Returns on Capital employed ratio, etc.

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B.Classification of ratio on the basis of the objective.:-

Ratio can be classified into four groups on the basis of objective.

• Liquidity Ratios

• Solvency Ratios

• Activity
• Profitability Ratio

• Investment Ratio

A. LIQUIDITY RATIO;-
Liquidity refers to the ability of a firm to meet its short-term financial obligation when
and as they fall due. Thus a liquidity ratio measures the firm’s ability to fulfil short-item
commitment out of its liquid assets.
Liquidity ratios are not only useful for the short-item creditor of the firm who are
interested in receiving the payment of their dues but also useful for the management of the firm
who are responsible to give the payment. The ratios are cold liquidity ratio because they give an
indication of the degree of liquidity or “money less” of the current assets of the company.

(1) CURRENT RATIO OR WORKING CAPITAL RATIO;-

This ratio explains the relationship between current Assets and current liabilities of a
business. “current assets” include those assets, which can be converted into cash within a
year’s time, and current liability includes those liabilities, which are repayable in a year’s
time. The formula for calculating the ratio is:-

Current Assets

Current Ratio =-------------------------------

Current Liabilities

SIGNIFICANCE;-

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 The current ratio can give a sense of the efficiency of a company’s operating cycle or its
ability to turn its product into cash .Companies that have trouble getting paid on their
receivables or have long inventory turnover can run into liquidity problems because they
are unable to alleviate their obligations.
This ratio is used to assess the firm’s ability to meet its short term liabilities on time
accounting – to accounting principles; a current ratio of 2:1 is supposed to be an ideal
ratio. The reason of assuming 2:1 as the ideal ratio is that the current assets include such
assets include such assets as stock, debtors etc,from which full amount cannot be released
in case of need. Hence, even if half the amount is released from the current assets on
time, the firm can still meet its current liabilities in full.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

CURRENT 4399.17 5416.73 7748.98 6,050.22 10721.32
ASSETS
CURRENT 2452.00 2999.61 4502.99 5065.11 7062.10
LIABLITIES
CURRENT 1.79 1.80 1.72 1.19 1.51
RATIO

COMMENTS:-
In 2006 Mangalam Cement ltd, gas Rs 2.26 to pay Rs 1 which is more than ideal ratio.
This or more than this ratio is good for investor’s point of view.
In 2007 & 2008 current ratio of Mangalam Cement ltd fell down to 1.34 &1.55 this is
less than idel ratio. These low numeric values of ratio do not indicate a good sign from
investor’s especially for sundry creditors. Company has to concentrate on company‘s
liquidity problem.

2.QUICK RATIO OR ACID-TEST RATIO OR LIQUID

RATIO:-
Quick ratio whether the firm is in position to pay its current liabilities within month
immediately.’ Liquid assets’ means those assets, which will yield cash very shortly. All
current assets except stock and prepaid expenses’ are included in liquid assets.

Liquid Assets
Quick Ratio=…………………….

Current Liabilities

SIGNIFICANCE:-

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 An ideal Quick Ratio is said to be 1:1.If is more it is considered to be better. The idea for
every rupee of current liabilities, there should at least be one rupee of liquid assets.

Companies with ratios of less than 1 cannot pay their current liabilities and should be
looked at with extreme caution .Furthermore, if the acid-test ratio is much lower than the
working capital ratio; it means current assets are highly dependent on inventory. Retail
stores are the example of this type of business.
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10
Current Assets(1) 4399.17 5416.73 7748.98 6,050.22 10721.32
Inventories(2) 548.39 1612.64 2614.40 1300.60 2374.84
Liquid Asset(1)-(2) 3850.48 3804.09 5134.58 4749.62 8346.48
Current Liabilities 2452.00 2999.61 4502.99 5065.11 7062.10
Quick Ratio 1.57 1.26 1.14 0.93 1.18

COMMENTS:-
In 2006 Samtel glass ltd has ability to meet their cash demand but in 2007,the numeric
value of ratio is less than their ideal value which sow that company was suffering from
cash problem. These Data of ratio is not good for those creditors’ who give short-term
loan to company. Now in 2008 ,company again starts playing its attention towards this
problem of liquidity as a result there is appreciable improvement in quick ratio.

A. LEVERAGE RATIO OR CAPITAL STRUCTURE RATIO

OR SOLVENCY RATIO:-
Any ratio used to calculate the financial leverage of the company to get an idea of the
company’s method of financing or to measure its ability to meet financial obligations.
There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses.

There are Five-type of Leverage ratio :-

1) DEBT-EQUITY RATIO:-

This ratio expresses the relationships between external liabilities and

shareholder’s funds. It indicates the proportion of fund, which is provided outside
creditors in comparison to shareholder funds. This Ratio is calculated ascertain
the soundness of the long –term financial policies of the firm.

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 a) External Equities:-These include all the long term and short term debt such as,
debenture, Mortgage loan, Bank loan, Public Deposits and all the current liabilities.

b) Internal Equities:-These include Equity share capital, Preference share capital,

Reserves and credit balance of Profit & loss Account.

DEBT
DEBT-EQUATIY RATIO= ----------------------
EQUITY

SIGNIFICANCE:-

This ratio is calculated to assess the ability of the firm to meet its long-term liabilities.
Generally debt-equity ratio of 1.1 is considered safe. If the debt-equity ratio is more than
that, it shows a rather risky financial position from the long –term point of view. As it
indicates that more of the funds invested in the business are provided by outside
creditors.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

SECURED LOAN 6693.21 6873.77 6425.
(1) 34
UNSECURED 0 0 572.
LOAN(2) 79
CURRENT 2833.2 4506.68 3517.
LIABILITIES(3 61
TOTAL 9526.41 11380.45 10515
DEBT[1+2+3] .74
EQUITY 8360 8360 8360
DEBT-EQUITY 1.14 1.36 1.2
RATIO 6

COMMENTS:-
In Mangalam Cement ltd the value of debt-equity ratio is more than 1. On the other hand,
return to company is not high so that debt become beneficial for company .It is a burden on
Company. In 2008 company shows some fall in this ratio but this improvement is not much
appreciable.

2) PROPRIETORY RATIO:-
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This is the ratio which shows the relationship of internal equity with the total assets. This ratio
indicates the proportion of total funds provided by a firm from internal sources it is.

Equity Internal Equity (shareholder’s fund)

Proprietory Ratio=------------------------ or ---------------------------------------------
Equity +Debts Total Equity or Total assets

SIGNIFICANCE:-

This ratio should be more than 50% in other word the proportion of shareholder funds to total
funds should be more than 50% a higher proprietary ratio is generally treated as indicator of
sound financial position from long term point of view, because it means that the firm is less
dependent on external source of finance.

YEAR 2005-06 2006-07 2008-09 2008-09 2009-10

EQUITY 8360 8360 8360
TOTAL DEBT 10365 10366 10367
EQUITY+DEBT 18725 18726 18727
Proprietory Ratio 0.45 0.45 0.45

COMMENTS:-

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In Mangalam Cement Ltd ,Proprietory Ratio is same which is less than 1 or 50%.The low
valueof ratio indicates the unsound financial position of company. It is not good for Long term
prospects. Company has to take certain steps to Equity portion of this ratio.

2) DEBT-TOTAL ASSET RATIO:-

Total debt comprises of long term debt & current liabilities &Total Assets comprises
of permanent capital and current assets.

While calculating total assets all the intangible assets appearing on the assets side
of the Balance sheets should be deducted such as preliminary expenses
Underwriting Commission debt balance of P & L A/c. This ratio indicates the
proportion of total funds acquired by a firm by outside sources.
Total Debt
DEBT-ASSET RATIO=--------------------------
Total Assets

SIGNFICANCE:-
The ratio should be less than 50% in other words the proportion of outside funds
assets should be less than 50% A higher ratio than this is generally treated an
indicator of risky financial position, because it means that the firm depends too
much upon outside loans for its existence. Payment of interest may become
difficult if profit is reduced. Hence, good concerns keep the debt –total assets. The
lowers the ratio, the better it is from the long-term solvency point of view.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

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 FIXED ASSETS(1) 17513.93 15844.49 13785.05
CAPITAL WIP(2) 210.58 373.17 251.56
PROPERATING 541.05 0 0
EXPENCES(3
INVESTMENT (4) 0.025 0.025 0.025
TOTAL 18265.59 16217.68 14036.64
ASSETS(1+2+3+4) 5
TOTAL DEBT 18806.66 1621.71 14036.64
DEBT-ASSET 1.03 1.00 1.00
RATIO

COMMENTS:-

It is appreciable ratio for Samtel Glass Ltd.It should be less than 1 or 50%.This
shows that company has strong financial position. If the Company has more total
assets then it is good for their long term financing.
3) INTREST COVERAGE RATIO.
The interest coverage ratio is a measurement of the number of times a company
could make its interest payments with its earnings before interest and taxes ;the
lower the ratio the higher the company’ debt burden
Earnings before interest& tax

Interest coverage ratio = ---------------------------------------

Total Interest

SIGNIFICANCE:-

For bond holders, the interest coverage ratio is supposed to act as safety gauge. It gives you a
sense of how far a company’s earning can fall before it will start defaulting on its bond
payments. For stockholders, the interest coverage ratio is important because it gives a clear
picture of the short –term financial health of business.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

Earnings before tax 472.20 -2,764.88 -1518.07
Interests 1,113.95 1,197.25 1,148.04

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Earnings before tax and 1586.15 -1567.63 -66.42
Interest
Interest coverage Ratio 1.42 -1.31 -0.06

COMMENTS:-
In 2005, interest coverage ratio of Samtel glass ltd was 1.42 which is low below standard for investor’s
point of view. Company has negative interest coverage ratio which shows that company is not able to pay
its interest obligation. It also shows that company has weak short-term financial health.

C.ACTIVITY RATIO OR TURN-OVER RATIO:-

These ratios measure how well the facilities at the disposal of the being utilized. These ratios are
known as turnover ratio as they indicate the rapidity with which resources available to concern
are being used to product sales. In other, words these ratio measure the efficiency and rapidity of
resources of the company. Some of the important activity ratio are discussed below:-

1. STOCK TURNOVER RATIO OR INVENTORY TURNOVER

RATIO:-
a) This ratio indicates the relationship between the cost of goods sold during the year
and average stock kept during that year.

Cost of goods sold

STOCK TURNOVER RATIO= ---------------------------------

Average stock

Cost of Goods Sold= (Opening stock+Purchase+Direct Exp- Closing stock)

Or
= Sales-Gross Profit

b) Average stock can be calculated as follows:-

Opening Stock+ Closing Stock

Average Stock= -----------------------------------

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 2

SIGNIFICANCE:-
This ratio indicates whether stock has been efficiently used on not it shows the speed with which
the stock is rotated into sales or the number of times the stock is turned into sales during the year.
The higher the ratio the better it is since it indicates that stock is selling quickly in a business
where stock turnover ratio is high. Goods can be sold at a low margin of profit and even
profitability may be quite high .A low stock turnover ratio indicates that stock does not sell
quickly and remain lying in the go down for quite a long time.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

GROSS SALES(1) 16422.06 1083 13653.08
3.1
GROSS PROFIT(2) 472.19 -2764. -1518.07
88
OPENING 1241.7 841.16 1255
STOCK(3)
CLOSING STOCK 841.16 1255 248.45
(4)
AVG.STOCK [(3)- 1462.01 1675.58 875.95
(4)]
COST OF GOOD 15949.87 13597.98 15171.16
SOLD(1)-(2)
STOCK 10.91 8.12 17.32
TURNOVER
RATIO

COMMENTS:-
In 2008, Mangalam Cement ltd has appreciably increased their stock turnover ratio .It is more
than double in 2008 than 2007. It proves that their sales increase during this period. Stocks are
converted into sells quickly even the profit margin increases.

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2) DEBTOR’S TURNOVER RATIO OR RECEIVABLE TURNOVER
RATIO:-
This Ratio indicates between credit sales and average debtors during the year:-

NET CREDIT SALES

DEBTOR’S TURNOVER RATIO = -----------------------------------------
AVG DEBTORS + AVG B/R

Bills receivable are added in Debtors for the purpose of calculations of this ratio. Avg Debtors
are calculated by adding the debtors and B/R at the beginning of a period as well as at the end of
the period and by dividing the total by 2.While calculating this ratio provision for bad and
doubtful debts is not deducted from total debtors so that it may not give a false impression that
debtors are collected quickly.

SIGNIFICANCE:-

This ratio indicates the speed with which the amount is collected from debtors. The higher the
ratio the better it is since it indicates that amount from debtors’ is being collected more quickly.
The more quickly the debtors pay the less the risk from bad debts and so the lower the expenses
of collection and increase liquidity form.

By Maintaining accounts receivable, firms are indirectly extending interest- free loan to their
clients. A high ratio implies either that a company operates on cash basis or that its extension of
credit and collection of accounts receivable is efficient.

A low ratio implies the company should re-asses its credit policies in order to ensure the timely
collection of imparted credit that is not earning interest for the firm.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET CREDIT SALES 14233.38 9139.52 11546.768
OPENING DEBTORS 3261.31 2204.73 900.03
CLOSING DEBTORS 2204.73 900.03 2245.64
AVG.DEBTORS 3835.385 2002.395 2695.655
DEBTORSTURNOVER 3.71 4.56 4.28
RATIO

COMMENTS:-

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In Mangalam Cement ltd., Debtors turnover ratio is continually increases which are good for a
company. It indicates that company operates its function either on cash basis or collection of
account receivable is Efficient. Here Company is facing low risk of bad debt.

3) AVERAGE COLLECTION PERIOD:-

This Ratio indicates the time within which the amount is collected from debtors and bills
receivables. Average Collection period may be calculated alternatively as follows:-

AVERAGE DEBTORS
AVERAGE COLLECTION PERIOD= ------------------------------------- x 365
TOTAL CREDIT SALES

SIGNIFIACNCE:-

This ratio shows the time which customers are paying for credit sales. In the above example the
average collection period is 30 days, it means that on average if a sales is made today, the cash
will be collected actually after 30 days i.e., 30 days credit sales are looked up in debtors.
Increase in the ratio indicates the excessive blockage of fund with debtors, which increases the
change of bad debts.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

AVERAGE DEBTORS 3835.385 2002.39 2695.655
NET CREDIT SALES 14233.38 9139.52 11546.768
AVG.COLLECTION 98.35 79.97 85.21
PERIOD

COMMENTS:-
In Mangalam Cement Ltd above data shows that in 2007 company got success in decreasing its
average collection period but in 2008 it again increases which is not a good sign for company. It
indicates that there is a blockage of fund with debtors. More the Average collection Period ,
more is the chance of bad debt.

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 4) CREDITORS TURNOVER RATIO OR ACCOUNT PAYABLE
TURNOVER RATIO:-

A short-term liquidity measure used to quantity the rate at which a company pays off its
suppliers. Account payable turnover ratio is calculated by taking the total purchase made
from suppliers and dividing it by the average accounts payable amount during the same
period.

TOTAL PURCHASE
CREADITORS TURNOVER RATIO = --------------------------------------
AVG.ACCOUNT PAYABLE

SIGNIFICANCE:-
The measure shows investor how many times per period the company pays its average
payable amount if the turnover ratio is falling from one period to another, this is sign that the
company is taking longer to pay off its suppliers than it was before.

YEAR 2005- 2006-07 2007-08 2008-09 2009-10

06
OPENING STOCK (1) 1100.51 1167.17 1922.23
CLOSING STOCK (2) 1167.17 1922.33 804.43
CONSUMPTION (3) 6257.24 4701.88 7001.1
PURCHASE (1)+(3)-(2) 6190.58 3946.82 8279.786
OPENING CREDITORS 2050.62 2359.2 3029.21
CLOSING CREDITORS 2359.2 3029.21 3127.98
AVG. CREDITORS 3230.22 3873.805 4593.2
CREDITORS 1.92 1.02 1.80
TURNOVER RATIO

COMMENTS: -

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In 2007 company had decrease its pay-off creditors which again increases in 2008. This indicates
that company has increases its pay –off turnover in a year. It is a good sign to creditors as pay –
off period decreases.

5) WORKING CAPITAL TURNOVER:-

It is a measurement comparing the depletion of working capital to generation of sales
over a given period. This provides some useful information as to how effectively
company is using its working capital to generate sales.

SALES
WORKING CAPITAL TURNOVER= -------------------------------
WORKING CAPITAL

WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES.

SIGNIFICANCE:-
This ratio measures the effectiveness with which a concern is using capital at its
disposal. It indicates how many times the capital is turned over into sales. The higher the
ratio the better it is for the business because a higher ratio indicates the quicker rotation of
capital to generate higher sales which leads to higher profitability.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES
CURRENT ASSETS 6401.20 6050.22 5458.42
CURRENT 2833.20 4506.68 3517.61
LIABILITIES
WORKING 3568.00 1543.54 1940.81
CAPITAL
WORKING 3.99 5.92 5.95
CAPITAL
TURNOVER

COMMENTS:-

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During the previous three year Samtel Glass Ltd., shows improvement in working capital
turnover. This ratio is concerned with the effective use of working capital & indicates the
number of times capital is changed into Sales. In 2007, current liabilities of company increased
due to which working capital also decreased in the same year. In 2008, net sales increased in
same manner in which working capital increases that indicate the some improvement in use of
working capital.

6) TOTAL ASSET TURNOVRE RATIO:-

This ratio expresses the relationships between total assets and net sales. It is calculated
using the following formula:-

NET SALES

TOTAL ASSET TURNOVER RATIO = ---------------------------------------

TOTAL ASSETS

SIGNIFICANCE:-
Assets turnover ratio measures a firm’s efficiency at using its assets in generating sales or
revenue the higher the number the better. It also indicates pricing strategy: companies with low
profit margins tend to have high assets turnover, while those with high profit margins have low
asset turnover.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08
TOTAL 18265.045 16217.685 14036.635
ASSETS
TOTAL 0.78 0.56 0.82
ASSETS
TURNOVER

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COMMENTS:-
Mangalam Cement ltd. Does not use their total assets effectively to increase their profit margins
& sales. In 2007 this ratio decrases vigorously which shows that sales were not increases to make
efficient utilization of resources.

7) FIXED ASSET TURNOVER RATIO:-

This ratio expresses the relationships between fixed assets less depreciation and net sales
or cost of goods sold. This formula used for calculating this ratio is as follows.

NET SALES OR COST OF GOODS SOLD

FIXED ASSETS TURNOVER RATIO = -----------------------------------------------
NET FIXED ASSETS
Net fixed assets= Fixed assets – Depreciation

SIGNIFICANCE:-
This ratio of particular importance in manufacturing concerns where the investments in fixed
assets are being utilized compared with the previous year, if there is increase in this ratio, it will
indicate that there is better utilization of fixed assets.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08
FIXED ASSET 12963.37 19417.38 25785.89 28131.33 31944.20
DEPERCIATION
NET FIXED
ASSET
FIXED ASSETS
TURNOVER

COMMENTS:-
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On the basis of mentioned data, Mangalam Cement Ltd does not utilize their fixed assets
efficiently. Sales do not occurs according to capacity of fixed assets. Management has to take
some critical steps for the improvements of this ratio.

8) CURRENT ASSETS TURNOVER RATIO:-

This ratio shows the relationships between current assets and net sales or cost of good
sold. It is calculated by using the following formula:-

SALES
CURRENT ASSSETS TURNOVER RATIO = ------------------------------

CURRENT ASSETS

SIGNIFICANCE:-
This Ratio reflects the efficiency and capacity of working capital. It is very useful
techniques for non-manufacturing unit regarding lesser working capital.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08
CURRENT 4399.17 5416.73 7748.98 7293.15 10721.32
ASSET
CURRENT 9.76 4.20 6.59 7.73 5.72
ASSET
TURNOVER

COMMENTS:-
In Mangalam Cement ltd. 2007 data shows the ratio of current assets turnover decreases
& again in 2008 it increases. These figure show that company do not utilize working
capital efficiently.

D. PROFITABILITY RATIO:-

The main object of ever business concern is to earn profits. A business must be able to
earn adequate profits in relation to the capital invested in it. The efficiency and the

1
 success of a business can be measured with the help of profitability ratios. We can
understand more about these ratios by categorized it into the following two:

1. Ratio calculated on the basis of sales-{Net Sales means (sales + income from
service)} these are as follows.

1) NET PROFIT RATIO:-

This ratio measured the relationships net profit and sales of a firm. Net profit is the
excess of revenue over expenses during a particular accounting period. The net profit
ratio is determined by dividing the net profit by sales an expressed as percentage. The
formula used is as follow.

NET PROFIT AFTER INTREST & TAX

NET PROFIT RATIO = ------------------------------------
NET SALES

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

Net Profit After 6902.36 4192.87 11354.097 9716.40 11881.03
Tax And Interest
NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08

SIGNIFICANCE:-
This ratio is the indication of overall profitability and efficiency of the business. This ratio not
only reveals the recovery of cost and expenses from the revenue of the period but also to leave a
margin of reasonable compensation to owners for providing capital at their risk a high net profit
ratio would only mean adequate returns to the owners.

COMMENTS:-
In Mangalam Cement ltd. Net sales do not show appreciable rise & cost of production is
continuously increases due to which there was slight profit margin 2005 but after that
company shows losses. It is not good from shareholders point of view.

2) OPERATING RATIO:-

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 It is calculated by subtracting all direct and indirect expenses relating to main
business from net sales.

Operating Profit

Operating Profit Ratio = ----------------------

Net Sales

SIGNIFICANCE:-

This Ratio indicates the net profitability of the main business, operating efficiency of a
firm. In Such a case, the operating profit ratio explains that the efficiency of the firm is
very low. Therefore, the higher the operating ratio that better would be the operational
efficiency of the firm.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08
Operating Profit 10717.25 6959.30 16063.06 16200.86 21145.35
OPERATING .24 .30 .31 .28 .34
PROFIT RATIO

COMMENTS:-

In Mangalam Cement ltd .operating profit ratio decreases from last 3 years continuously.
This shows that net profit of main business is very low. This highly low numeric value of
ratio indicates the danger for the business.

GROSS PROFIT RATIO ;-

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 Gross profit

Gross profit ratio = ----------------------

Sales

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Gross Profit 9856.93 6894.80 15768.42 15883.20 20949.19
NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08
GROSS 0.22 0.30 0.30 0.28 0.34
PROFIT
RATIO

II) Ratio calculated on basis of Capital –There are as follows;

(1) RETURN ON CAPITAL EMPLOYED;

This ratio reflects the overall profitability of the business. It is calculated by comparing
the profit earned and the employed to earn it. This ratio is usually in percentage and is
also known as ‘Rate of Return’ or Return on Capital Employed’ or ‘Yield on Capital’.
The tern ‘Investment’ here refers to long-term funds deployed in the enterprise. AS
defined earlier long-term fund are also know as capital employed which means total of
shareholder fund and long term loans. Since the Capital employed includes shareholders
funds and long-term loans, interest paid on long-term loans will not be deducted from
profits while calculating this ratio. The ratio is computed as under.

Net Profit before interest and tax

Return on Investment = -----------------------------------
Capital employed

Here, Capital Employed = Total Assets—Current Liabilities or Net worth +Total debts

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SIGNIFICANCE;-

The return on capital employed provides a test of profitability related to the long-term funds. The
higher the ratio the more effective and efficient would be the utilization of capital or vice-versa.
The comparison of this ratio with that of similar firms and with industry average over a period of
time would disclose as to how effectively the long terms funds provided by owners and creditors
have been used.
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10
Earnings before Tax & 9536.78 6351.04 14279.55 13518.34 18609.39
Interest
Total Assets (1) 17362.54 24944.36 24131.86 36232.58 44615.86
Current Liabilities (2) 4399.17 2999.61 4502.99 5065.11 7062.10
Capital Employed (1)- 12963.37 21944.75 19628.87 31167.47 37553.76
(2)
Return on Capital 0.73 0.28 0.072 0.43 0.49
employed

COMMENTS;-
In Mangalam Cement Ltd. Return on capital employed is in negative. This indicates that there is
effective & efficient utilization of capital. This shows that effective utilization of long term fund
is not takes place.

2) RETURN ON EQUITY SHARE HOLDER’S FUND:-

This ratio expresses the percentage relationship between net profit after interest and tax and
proprietors fund and shareholders’ investment. This is also known as “return on proprietor’s
funds” It is used to ascertain the earning power of shareholders investment.
Proprietors or shareholders funds include preference share capital as well as equity shareholders
funds which in turn comprises equity share capital share premium, and reserve and surplus. The
shareholders equity also refers to the net worth of a company. The net profit is after deducting
interest and tax but before deducting dividend on preference shares. It is the final income that is
available for distribution as dividend to shareholders. The ratio is calculated by using the
following formula:-

Net profit after interest and Tax

Return on proprietor’s Fund =--------------------------------------
Shareholder’s Fund or Net Worth

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SIGNIFICANCE:-
The return on Equity provides a test of profitability related to the long- term funds. The Higher
the Ratio the more effective and efficient would be the utilization of equity or vice versa. The
comparison of this ratio with that of similar company and with industry average over a period of
time would disclose as to how effectively long terms fund provided by equity holders have been
utilized.

YEAR 2005-06 2006-07 2007-08 2008-2009 2009-2010

Profit after Tax (1) 6902.36 4192.87 11354.97 9716.40 11881.03
Net Worth 11242.47 14769.19 22206.52 29433.19 38682.70
Return on 0.61 0.28 0.51 0.33 0.30
shareholders’ fund

COMMMENTS:-
In Mangalam Cement Ltd, profitability on share capital & long term fund is in negative i.e.
shareholders loss their amount from principal. This decreases the value of company in market
which may create finance problem in future.

3) RETURN ON TOTAL ASSET:-

Profitability can also measured by establishing relationships between net profit

and total assets. This ratio is computed by dividing the net profits after tax by total
funds invested or total assets. Total assets mean all net fixed current assets and
non- trading investments. The ratio is expressed as formula.

NET PROFIT AFTER INTEREST AND TAX

RETURN ON TOTAL ASSETS = ------------------------------------------------------

TOTAL ASSETS

SIGNIFICANCE:-
ROA tells about what earning were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. This is why when

1
using ROA as a comparative measure it is best to compare it against a company’s previous ROA
numbers or the ROA of similar Company.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

PROFIT 6902.36 4192.87 11354.97 9716.40 11881.03
AFTER TAX
TOTAL 17362.54 24944.36 24131.86 36232.58 44615.86
ASSETS
RETURN ON 0.39 0.16 0.47 0.26 0.26
TOTAL
ASSETS

COMMENTS:-

In Mangalam Cement Ltd Return on total assets are very pathetic. Company Invests money in
various operations but do not able to get back return from it, Here also company is continuously
losing.

D. INVESTEMENT ANALYSIS:-

1) RESERVE CAPITAL RATIO:-

This ratio explains the profit allocation policy of a company . It is Calculated by
dividing reserves by equity shares capital thus.

RESERVE
RESERVE CAPITAL RATIO = ---------------------------
EQUITY SHARE CAPITAL

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 SIGNIFICANCE:-
The ratio depicts the progress or development made by a company when it follows
conservative policy in dividend distribution then ratio will be high. A high Ratio
revels sound financial position and the capacity of the company to absorb losses
arising in future it indicates that the prices of its shares have gone up.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

RESERVE & SURPLUS 8417.80 11944.52 19381.85 26629.87 36013.32
SHARE CAPITAL 2824.67 2824.67 2824.67 2803.32 2669.38
RESERVECAPITAL 2.98 4.22 6.86 9.49 13.49
RATIO

COMMENTS:-
This data find out equity share is no more than different in three years. So company is
not dealing of trading in share. Company has good reserves in 2006.

CONCLUSION:-

LIQUIDITY RATIO

CURRENT RATIO 2.26 1.34 1.55

QUICK RATIO 1.34 0.62 1.25

LEVERAGE RATIO

DEBT- EQUITY RATIO 1.16 1.36 1.26

PROPRITEORY RATIO 0.45 0.45 0.45

DEBT-ASSET RATIO 1.03 1.00 1.00

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 DEBT-SERVICE-COVERAGE 1.42 -1.31 - 0.06
RATIO
INTEREST-COVERAGE RATIO 3.17 -O.99 2.06

ACTIVITY RATIO

STOCK TURNOVER RATIO 10.91 8.12 21.65

DEBTORSTURNOVER RATIO 3.71 4.56 4.28

AVG.COLLECTION PERIOD 98.35 79.97 85.21

CREDITORS TURNOVER 1.92 1.02 1.80

RATIO
WORKING-CAPITAL 3.99 5.92 5.95
TURNOVER
TOTAL ASSETS TURNOVER 0.78 0.56 0.82

FIXED ASSETS TURNOVER 0.90 0.64 0.99

CURRENT-ASSETS TURNOVER 2.22 1.51 2.12

PROFITABILITY RATIO

ON THE BASIS OF SALES:-

NET PROFIT RATIO 0.03 -0.35 -0.1

OPERATING PROFIT RATIO 0.16 0.13 0.01

GROSS PROFIT RATIO 0.11 -0.17 -0.02

ON THE BASIS OF CAPITAL:-

RETURN-ON-CAPITAL 0.10 -0.35 -0.10

EMPLOYED

RETURN ON SHARE HOLDER’S 0.04 0.13 0.01

FUND

RETURN ON TOTAL ASSET 0.11 -0.17 -0.02

INVESTEMENT ANALYSIS

RESERVE CAPITAL RATIO 0.63 0.34 0.34

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1
RESEARCH METHEDOLOY

Research in common parlance refers to search for knowledge. Data has been collected by
primary and secondary methods. Research methodology is away to systematically solve the
research problem. It may be understood as a science of studying how research is done
systematically. The study of Research methodology gives the student the necessary training in
gathering material and arranging them.

According to Hudson maxim, “All progress is born of inquiry. Doubt is often better than
overconfidence, for it leads to inquiry, and inquiry leads to invention.”

DATA COLLECTION:-

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The task of data collection begins after a research problem has been defined and research
design \plan chalked out. While deciding about the method of data collection to be used for the
study , the researcher should keep in mind two types of data.

THERE ARE TWO TYPES OF DATA:-

➢ PRIMARY DATA
➢ SECONDARY DATA.

TOOLS FOR DATA COLLECTION:

Data collected mainly belonged to primary source as the sample units were interviewed
directly, some secondary data was also collected the company profile and the company
published literature, business magazines& previously framed project report.

OBJECTIVES OF STUDY:-

• To know the financial position of the company.

• To find out true and fair view of the business.
• To find out various assets mix and the capability of the business to meet its
long-term & short-term liabilities.
• To study about working environment planning & strategies, business policy,
various methods & technologies for better output utilization of resources.
• To understand the management of human assets, finance, marketing &
production for achieving the desired goals.

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LIMITATIONS OF STUDY:-

• There was legs information shared by the MCL management regarding

ANALYSIS OF FINANCIAL STATEMENT OF MCL, KOTA.

• The study which posses a time constraint on the research.

• Research is based on secondary data of company profile is not available in

any website and also difficulty get in official documents.

RECOMMENDATIONS:-

• The company has achieved highest ever turnover in future as compared to

previous turnover.
• If company will be achieve net profit or controlled net loss in future then
good for going on company, otherwise company should be closed on merge
other company.
• Company should have awareness all facilities by staff and employees.
• The company should be better utilization of human resources and
improvement in work culture and productivity.

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 • The company should moving ahead with strong performance and well
conceived strategies for expansion, diversification and corporate
transformation.
• The company continuously customer satisfaction quality products with best
after sales services.
• Employees were motivated through competition , prizes and incentives
declared by the company from time to time.

Answer
BHARGAVI,
here is some useful material.
regards
LEO LINGHAM
===========================

Recruitment: Do you measure up?

Common recruitment metrics

1.candidate ratio
For agencies wishing to track candidate interest and/or the short-listing resources required for a
typical candidate pool.
To add meaning to this ratio, an agency should first seek to understand various job application and
short-listing methods and their relative effectiveness.
total candidates / offers accepted
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2.INTERNAL / EXTERNAL CANDIDATE RATIO
Useful for agencies that frequently use internal candidates to fill positions or that have established
strategies around recruiting internal talent to reduce turnover and improve development opportunities.
Internal recruits are often calculated to include all internal movements, transfers and promotions
INTERNAL / EXTERNAL RECRUITS
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RECRUITMENT SOURCE BREAKDOWN
This metric presents the percentage of external engagements by the recruitment channel through
which they first learned of the vacancy. It is particularly useful for agencies that use multiple channels
to advertise employment opportunities and wish to monitor volume and quality of candidates by
source in order to maximise advertising ‘spend’. Recruitment Source information can be captured via
an application form or managed manually.
EXTERNAL ENGAGEMENTS [ recruitment source ] / EXTERNAL ENGAGEMENTS X 100
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AVERAGE TIME TO START
Useful for agencies that wish to measure the efficiency and timeliness of their recruitment processes.
The Australian Public Service Commission recommends a target of 45 days from the identification of
the recruitment need to the new starter commencing for a typical, non-SES recruitment exercise.
AVERAGE TIME FROM IDENTIFICATION OF RECRUITMENT NEED / NEW STARTER COMMENCING
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INTERVIEWS PER VACANCY

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For agencies interested in finding the balance between interviewing ‘enough’ candidates and
protracting the recruitment process by interviewing an excessive number of candidates.
This metric can be a useful indicator of process quality (e.g. recruitment speed or short-listing ability),
candidate quality or of a selection team’s understanding of the role
CANDIDATES INTERVIEWED / VACANCIES.
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OFFER RATE
These metrics will help the agency to identify inefficiencies in the recruitment process and gauge the
strength of the employment value proposition or ‘offer’ to candidates.
[OFFERS EXTENDED / CANDIDATES INTERVIEWED] X 100
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OFFER ACCEPTANCE RATE
These metrics are especially important for those who operate in highly competitive talent markets
[OFFERS ACCEPTED / OFFERS EXTENDED ] X 100
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TURNOVER RATE OF NEW RECRUITS
Useful for those who wish to measure the rate at which new recruits (e.g. <1 year length of service)
leave the agency.
The early departure of an employee may be due to any number of factors, including poor job or
organisational fit, a poor understanding of the position, or poor induction. In this way, this metric can
be used as an indication of recruitment effectiveness.
[ TERMINATIONS {new recruits}/ AVERAGE HEADCOUNT] X 100
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NEW RECRUITS PERFORMANCE RATIO
Arguably the most important metric – it does not matter what the process costs, how long it takes, or
whether it meets expectations if the agency is recruiting the wrong people.
This metric helps agencies to monitor the relative effectiveness of recruitment activities in securing
high-performing candidates and to evaluate return on investment.
It may be considered more useful to establish an ‘interim’ performance rating at the three or six
month period as this can be more directly telling of recruitment effectiveness, while a performance
rating a year into the employee’s service may be influenced by many other factors
AVERAGE PERFORMANCE RATING. RECENT RECRUITMENTS / AVERAGE PERFORMANCE RATING .
AGENCY
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RECRUITMENT COST PER VACANCY
These metrics will be most useful to agencies that wish to monitor the relative magnitude of direct and
indirect recruitment costs.
The ‘Cost Breakdown’ method can often be more valuable than the traditional cost–per–vacancy
metric because it isolates the various individual factors that affect cost.
ANNUAL RECRUITMENT COST / NUMBER OF VACANCIES.
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RECRUITMENT COST BREAKDOWN
High costs may be driven by process inefficiencies, poor technology, ineffective advertising, excessive
allowances or travel expenses, or other factors. However, recruitment costs must be considered in
light of the potential costs and benefits of acquiring high–quality candidates.
{ RECRUITMENT COST [type]/ TOTAL COST ] X 100
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NEW RECRUITMENT TURNOVER CONTRIBUTION
As a general rule, any employee who voluntarily leaves within the first year of service can be
interpreted as a poor recruitment decision. This metric can also be an indicator of other problems
within the agency.

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Recruitment mistakes result in higher turnover, higher costs and lower productivity. It is therefore
important to spend more upfront to ensure that those recruited are the best suited to the agency
[ TERMINATION .SHORT SERVICE / TERMINATIONS ] X 100
---------------------------------------------------------------
RETENTION RATE
This is a useful benchmarking metric for agencies who understand their patterns of candidate
attraction and separation (who is joining, who is leaving, and for what reasons) and who wish to
monitor and measure their retention rates in light of new HR strategies.
[START OF PERIOD HEADCOUNT+ EXTERNAL RECRUITS- TERMINATIONS]
/ [ START OF PERIOD HEADCOUNT + EXTERNAL RECRUITS] X 100.

============================
1.RECRUITMENT SOURCING COST / TOTAL PAYROLL COST.

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2.RECRUITING COST / TOTAL PAYROLL COST.

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3.COST PER HIRE.

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4.HIRING TIME / DEMAND FULFILLMENT TIME.

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5.QUALITY OF HIRE [ manager's satisfaction index]

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6.PROCESS DOCUMENTATION INDEX.

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7.PROCESS AUDIT COMPLIANCES SCORE.

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8. PROCESS CYCLE TIME

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Quality of Hire = 65% of target.
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Time to Hire= 70% of target
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Time to Productivity = 70% of target
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Cost per Hire = 80% of target
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Job Vacancies Outstanding = 75% of target.
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Output and performance of the hire (70% of the target )
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How quickly the new hire performs the job productively (60% of the target)
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Retention Rate for New Hires = 70% of the target.

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----------------------------------------------------------------------------
Completion Rate for OnboardingTasks = 60% of the target.
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Time to Productivity for New Hires = 50% of the target.
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