MA Project - F-1

A Project Report
On
Analysis of Financial Statement on Cement companies
For the subject Management Accounting in the Masters of Business Administration programme at
GLS University
Submitted to
Dr. Hetal Vyas
Assistant Professor
By
Jaini Shah (202100620010249)
Vishwa Jain (202100620010149)
Hetvi Shah (202100620010247)
Pankti shah (202100620010256)
Batch: 2022-23
Sem-1
Class: F1
1
TABLE OF CONTENT
SR.NO PARTICULARS PAGE NO.
1 Introduction of Financial Statement Analysis 3
2 Introduction of Ratios 6
3 Introduction of Cement Industries 7
4 Analysis of UltraTech Cement ltd. 10
5 Analysis of Ambuja ltd. 16
6 Analysis of ACC ltd. 22
7 Suggestions 28
8 Conclusions 28
2
INTRODUCTION ABOUT FINANCIAL STATEMENT ANALYSIS
Financial statements are the statements which are prepared for the company/firm to get to
know about how well the company is working. These statements are in the form of trading a/c, profit
& loss a/c and the balance sheet. Then comes the analysis part in which with the help of statement
and different tools like common size method analysis, comparative method analysis, trend analysis
and ratio analysis, we can conclude or compare the data that how much the company is growing
towards profit and what are the expenses that should be controlled in near future.
The types of financial analysis are as follow:
1. Vertical Analysis i.e. Common Size Statements

2. Horizontal Analysis i.e., Comparative Statements and Trend Analysis
3. Ratio Analysis
This statement analysis is done from the profit and loss and balance sheet that are prepared and on
that basis the statement is made:
• Vertical Analysis- This method of analysis is conducted in which the figures are analyzed vertically
of the given financial statement. It is also known as Common Size Statement. The statement in
balance sheet is shown as the total asserts and the total liabilities and the total sales are taken into
the consideration for profit & loss a/c. A statement where balance sheet items are expressed in the
ratio of each asset to total assets and the ratio of each liability is expressed in the ratio of total
liabilities is called common size balance sheet. For example, the total assets are taken as 100 and
different assets are expressed as a percentage of the total. Similarly, various liabilities are taken as
a part of total liabilities.
Inter period comparison

Particulars Figures of year 1 % Figures of year 2 %
Total Liabilities 100 100
Total Assets 100 100
Rest of other liabilities are compared with total liabilities (100%)
3
Particulars Firm 1 % Firm 2 %
Total Liabilities 100 100
Total Assets 100 100
Rest of other Assets are compared with total Assets (100%)
• Horizontal Analysis- This method is conducted in which the figures of the following items of the
financial statement of one year are compared with the same item of another year. In this statement
analysis we require at least two years financial statements. It is also known as Comparative
Method of Analysis. The comparative balance sheet shows the different assets and liabilities of
the firm on different dates to make comparison of balances from one date to another. The
comparative balance sheet has two columns for the data of original balance sheets. The third
column is used to show the (increase/decrease) in figures. And lastly the fourth column may be
added for giving or knowing the percentage of increase or decrease. While interpreting the data of
comparative balance sheet the interpreter is expected to study following aspects that are as follow:
➢ Current financial position and liquidity position of the company/firm- In this study is
done for the current financial position or liquidity position of a concern one should
examine the working capital in both the years.
➢ Long term financial position- In this study is on the long-term financial position which
is the main concern of the company, one should examine the changes that are seen in the
fixed assets, long term liabilities and the capital of the company.
➢ Profitability of the concern- In this study is made on the comparative balance sheet in
the profit is the main concern. It helps us to know whether there is increase / decrease in
profit and how we can improve the steps to make a growth for the company.
Inter firm Comparison

Particulars Firm 1 Firm 2 Absolute Difference Percentage Increase or
(Rs) Decrease (Rs)%
(1) (2) (3) = (1) – (2) (3)(1) *100
4
Particulars Year 1 Year 2 Absolute Increase or Percentage Increase
Decrease (Rs) or Decrease (Rs)%
(1) (2) (3) = (1) – (2) (3)(1) *100
Comparative Income Statement- this provides the income which results of the operations of the
business that have to be or has conducted. This statement is traditionally known as profit and loss a/c.
the components like: goods sold, selling expenses, office expenses etc. These all components are
taken into the consideration and are matched with the corresponding previous year and the changes
are noted. It gives an idea of the progress of a business over a period of time. The change in the value
of money and the percentage change can be determined to analyze the profitability of the company.
• Trend Analysis- This method is used to conduct figure of an item of one year is compared
with the same item of consecutive three or more year’s statements. This method cannot be
used for inter firm’s comparison. In this analysis the trend percentage are calculated for
each item by taking the figure of that item for the base year taken as 100. Generally, the
first year is taken as a base year. The analyst is able to see the trend of figures, whether
moving upward or downward.
➢ One year is taken as a base year which is generally is the first year or last year.
➢ Trend percentage are calculated in relation to base year.
➢ Trend analysis: Current year value of the item / base year value of the same item *100
5
INTRODUCTION OF RATIO ANALYSIS
Ratio Analysis refers to the analysis of the financial statements in conjunction with the
interpretations of the financial results of a particular period of operations derived with the help of
ratio. It is used to determine the financial soundness of the business that is taken into the
consideration. Ratio can be used in the form of percentage, quotient and the rates. It depicts the
inter-relationship between the facts and figures of various segments of the company which are
helpful in making important financial decisions. Helps the management in take effective
discharging its function/operations such as planning, organising, controlling, directing and
controlling. It is used as an effective control of performance of business activities.
Ratio analysis is a quantitative method of gaining insight into a company’s liquidity,

operational efficiency and profitability by studying its financial statements such as the balance
sheet and income statement. Ratio is the analysis of fundamental equity analysis. It can mark how
a company is performing over time, while comparing a company to another within the same
industry or the sector.
6
INTRODUCTION (CEMENT INDUSTRY)
India is the second largest producer in the world of the cement. It has accounted for more than 7% of
the global installed capacity. The cement industry is comprising of approx. more than 300 mini
cement plants and 130 large cement plants. In the infrastructure boom in India, this industry is one of
the main beneficiaries. It has a lot of potential for the development in the field of construction and
infrastructure sector and it is expected to largely benefit from it with the outgoing demand and
supply.
The total capacity of India is approx. 160 million tones after China. The cement industry is dominated
by approx. Of the total capacity, only 2% lies with the public sector and the remaining 98% lies with
the private sector only. The top companies account for approx. 70% of the total production. And
among 210 large cement plants, 75-80 are situated in the states of Andhra Pradesh, Rajasthan and
Tamil Nadu. The Indian companies of cement are among world’s greenest cement manufacturers.
After government infrastructure sector, the major consumer of cement is private housing sector which
is approx. 50-52%. In India, the cement industry is recently going through a technological change
with lots of upgradations and integrations. The modern dry process which is considered as more
environment friendly accounts 92% of the total capacity. The remaining 8% uses old modern dry
process. There is huge scope of heat recovery which results in reduction in the emission level which
creates an improvement in the environment through cement plans.
INTRODUCTION OF THE COMPANIES
1) ACC LTD.
The ACC limited formerly known as “The Associated Cement Companies Limited) is one of
the largest cement producers in India. The company has been established in Mumbai,
Maharashtra on august1936. The company is a subsidiary of Holcim Group. In 2006, the
name of The Associated Cement Companies was changed to ACC limited.
The company is the only cement company to get Superbrand Status in India.
The company manufacturers variety of cements, blended cements and ready mix concrete.
They also manufacturers gypsum and refractory products like Brown Tabular Alumina. The
company also provides consulting services for operating and setting up cement plants and
refractories. They owned cement plans all over India.
• The company was formed by a merger of 10 existing cement companies.
• They established India’s first indigenous cement plant at Chaibasa in Bihar.
7
• In 1956, they established bulk cement depot at Okhla in Delhi.
• In 1965, they established Central Research Station at Thane.
• They acquired The Cement Marketing Company of India in the year 1973. • The
company commissioned their 1st 1MTPA plant at Wadi Karnataka in 1982 and also
incorporated Bulk Cement Corporation of India -a joint venture with the government of
India.
• They initiated commercial manufacture of Ready Mixed Concrete at Mumbai in the
same year.
They also commissioned captive power plants in Madhya Pradesh.
To strengthen their stake in GOA, they acquired 40% stake in Alcon Cement Company Pvt ltd.
They inaugurated new plant of grinding with a capacity of 1.60 million tones in Karnataka. They
also acquired 100% equity stake in National Limestone Company Pvt Ltd which made it as a fully
owned subsidiary of the company.
2) AMBUJA CEMENTS
Ambuja cements is formerly known as Gujarat Ambuja Cement Limited. It is major cement
producing company which markets cement and clinker for both domestic and export markets.
The company was founded by two traders who were having little knowledge of cement and
manufacturing. They commenced cement production in 1986. The company is in strategic
partnership with Holcim, which is the second largest cement manufacturer from 2006
throughout the world.
The company is a premier brand for OPC and PPC category. They are having a significant
footprint in the eastern, northern and western markets of India.
The company is a public company which is listed in Bombay Stock Exchange and National
Stock Exchange of India ltd. They have integrated cement plants mainly in states like Gujarat,
Himachal Pradesh, Maharashtra, Rajasthan etc. Ambuja Cement Foundation is the corporate
social responsibility of the company which was registered formally in 1993. It works with the
rural communities which are surrounded by the proposed manufacturing locations. The
foundation is working across 12 states which covered almost 22 locations throughout India.
The company aspires to be the most sustainable and competitive company in the cement
manufacturing industry. The mission of the company is “TO CREATE VALUE FOR ALL”
8
3) ULTRATECH CEMENT
Based in Mumbai, it is an Indian company. The company is the subsidiary of the multinational
Indian conglomerate, ADITYA BIRLA GROUP.
The company is the biggest manufacturer of white cement, grey cement and ready mix
concrete (RMC). They ranked among the world’s leading makers of cement. The company is
the only company which is having a capacity of over 100 million tons in the world.
The company is having 25 grinding units, 23 integrated plants and seven bulk terminals. They
are having a strong presence in international markets Their operations are across India, Sri
Lanka, Bahrain.
This company goes to the market under the brand name of Birla White in the segment of
white cement. It has a plant of white cement which is having a capacity of 0.68 MTPA and
also 2 Wall Care putty plants which are having a combined capacity of 0.85 MTPA. Their
vision is to be “THE LEADER” in Building Solutions. They are the founding member of the
Concrete Association and Global Cement and are having the market reach of over more than
80% across India. The retail format of the company offers an array of engineered products to
cater the new- age constructions.
There are ACC blocks (Aerated Autoclaved Concrete) are basically light- weight blocks
which are economical are very crucial for high rise buildings. Besides the company offers
wide variety of products for construction purpose under one roof to the end customers. They
pioneered the Ultra Tech Building Solutions – a concept to provide wide range of solutions
for constructing their homes.
9
ULTRATECH CEMENT LTD.
Common Size Analysis of Profit & Loss A/C as on 31-12-2019 to 31-12-2020 (in
lakhs)
Particulars 19- Dec 20-Dec Analysis of Analysis of
2019 in (%) 2020 in (%)
Sales 100% 100%

41,462.26 42,429.89
Expenses 82.28% 78.21%

34,115.32 33,183.92
Operating Profit 17.72% 21.79%

7,346.94 9,245.97
Other Income 0.84% 1.53%

350.10 651.06
Depreciation 5.91% 6.42%

2,450.73 2,722.66
Interest 4.29% 4.69%

1,777.86 1,991.65
Profit Before Tax 8.37% 12.21%

3,468.45 5,182.72
Tax 2.58% (1.33%)

1,068.07 (568.16)
Net Profit 5.79% 13.56%

2,403.51 5,755.26
INTERPRETATION
1) 2019- for Ultratech Cement Ltd. approximately 82% of every sales amount is spend on expenses
and 17% of every sales amount is left in operating profit to cover remaining expenses. Out of 17%
remaining, almost 5% is used on depreciation, 0.84% earned on other income and 4.29% on interest.
Company earns almost 8% of net income before tax and over 5-6% in Net Profit after tax on every
sales amount.
2) 2020- for Ultratech Cement Ltd. approximately 78% of every sales amount is spend on expenses
remaining, almost 6% is used on depreciation, 1.53% earned on other income and 4.69% on interest.
Company earns almost 12% of net income before tax and over 13-14% in Net Profit after tax on
every sales amount.
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Comparative Statement of balance sheet as on 31-12-2019 to 31-12-2020 (in lakhs)
Particulars Dec-19 Dec-20 Increase/ Increase/
Decrease in Rs. Decrease in
percentage (%)
Equity Share capital 274.64 288.63 13.99 5.09
Reserves 28,087.65 38,755.13 10667.48 37.98
Borrowings 25,337.00 23,018.96 -2318.04 -9.15
Current liabilities 22,826.08 17,151.09 -5674.99 -24.86
Total 76,525.37 79,213.81 2688.44 3.51
Net block 56,644.62 57,150.96 506.34 0.89
Capital Work in Progress 919.59 -233.73 -20.27

1,153.32
Investments 2,921.33 5,928.69 3007.36 102.94
Current assets 15,806.10 15,214.57 -591.53 -3.74
Total 76,525.37 79,213.81 2688.44 3.51
INTERPRETATION
1) Current financial position and liquidity position: positive working capital indicates improved
financial position of company. Ultratech Cement has reduced current liability by 24% and current
assets has reduced at a very nominal %.
2) Long term- financial position: long-term borrowings has decreased compared to last year (119%)
means lower dependency on outsiders funds and interest liability will decrease in future and increase
of net block (fixed assets) means company has purchased fixed assets for better production. Ultratech
Cement has made great investments in 2020 and increased fixed assets and equity also moreover
reduced borrowings and current liability indicates management has planned to increase internal funds
and reduced external liabilities.
11
Trend Analysis of Profit & Loss A/C for the year ending 2017,2018,2019 & 2020
(in lakhs)
Particulars Mar-17 Mar-18 Mar-19 Mar-20
Sales
25,374.94 30,978.62 41,462.26 42,429.89
Index (%) 100%

122.08 133.84 167.21
Expenses
20,162.50 24,833.59 34,115.32 33,183.92
Index (%) 100%

123.17 169.20 164.58
Operating Profit
5,212.44 6,145.03 7,346.94 9,245.97
Index (%) 100%

117.89 140.95 177.38
Other Income
648.12 241.97 350.10 651.06
Index (%) 100%

37.33 54.02 100.45
Depreciation
1,348.41 1,847.93 2,450.73 2,722.66
Index (%) 100%

137.05 181.75 201.92
Interest
640.10 1,237.60 1,777.86 1,991.65
Index (%) 100%

193.34 277.75 311.15
Profit before tax

3,872.05 3,301.47 3,468.45 5,182.72
Index (%) 100%

85.26 89.58 133.85
Tax
1,158.54 1,077.01 1,068.07 (568.16)
Index (%) 100%

92.96 92.19 (49.04)
Net profit
2,714.92 2,222.17 2,403.51 5,755.26
Index (%) 100% 81.85029393 88.52968043 211.9863569
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INTERPRETATION
1) Sales of UltraTech has gone up from 100%, 122.08%, 133.84%. & 167.21% from 2017-2020.
2) Expenses were similar to sales amount which has lower the operating profit of UltraTech.
Compared to 2018, operating profit has improved in 2019 and 2020 respectively. 3) In 2018 &
2019, other income was much lower compared to other years which means company has reduced
non-operating earnings.
4) Depreciation of UltraTech were increasing in all years.
5) Interest has gone up from 100% to 311% (2017-2020), means company has taken debt/ loan or
has paid interest of past loans. This indicates company is dependent on outsider funds. 6) Profit
Before tax & Net profit has decreased in 2018 & 2019. Company’s profitability was good in
2020 (211.98%)
CONCLUSION:
• UltraTech’s performance in 2018 & 2019 was very poor. Though sales, expenses, operating
profit was at increasing pace, company’s other income has reduced, depreciation and
interest has increased which has decreased Net profit in 2018 & 2019.
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Ratio analysis for ULTRATECH CEMENT LTD.
1) Current Ratio = Current Assets / Current Liabilities

Current Assets = 15214 ; Current Liabilities = 17151
Current Ratio = 15214 / 17151
= 0.88:1
As the current ratio is under 1 which means company would be unable to pay off its obligations if
they came due at that point. Current ratio of UltraTech cement company is not satisfactory as the
ratio (0.88) is below generally accepted standard of 2:1. Its ideal to have higher current ratio
which makes company capable to pay back its short-term liabilities with its short-term assets.
2) Liquid Ratio = Liquid Assets / Current Liabilities

Liquid assets = Current assets – Inventories = 15214 – 4183 = 11031; Current Liabilities = 17151
Liquid ratio = 11031/17151
= 0.64:1
May company face difficulties to meet its short-term obligations using most liquid assets as
Liquid ratio is less than 1. It’s ideal to have 1 or more than 1 ratio for liquid ratio.
3) Debt to equity ratio = Debt/Equity (Shareholder’s Fund)

Debt = Long term borrowings = 23018.96
Shareholder’s fund = Equity + Preference share + Reserve & Surplus
= 288.63 + 0 + 38755.13 = 39043.76
Debt-Equity Ratio = 23018.96 / 39043.76
= 0.59:1
Ratio is less than 1 indicates that the portion of assets provided by stockholders is greater than the
portion of assets provided by creditors. Creditors usually like a low debt to equity ratio because a
low ratio (less than 1) is the indication of greater protection to their money.
4) Proprietor Ratio = Shareholder’s fund / Total assets

= 288.63 + 0 + 38755.13 = 39043.76
Total Assets = 79213.81
Proprietor Ratio = 39043.76/79213.81
= 0.49:1
A higher proprietary ratio indicates a strong financial position of company and greater security for
creditors. UltraTech company has approx. 50% contribution of stockholders in total capital.
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5) Total assets to debt ratio = Total assets/ Debt
Debt = Long Term borrowings = 23018.96
Total Asset to debt ratio = 79213.81 / 23018.96
= 3.44
6) Debtors Turnover ratio = Net credit sales / Average trade receivables

Sales = 42429.89 Average Trade receivables = 2383.22
Debt Turnover ratio = 42429.89 / 2383.22
= 17.8 Times
Debtor’s collection period = 365 / Debtors turnover Ratio
= 365 / 17.8
= 20.5 = 21 Days
A longer collection period (21 days) may negatively effect the short-term debt paying ability
of business in the eyes of analysts.
7) Net Profit Ratio = Net profit after tax *100/ Revenue from operations
Net Profit = 5755.26 Sales = 42429.89
Net Profit Ratio = 5755.26 *100 / 42429.89
=13.56%
A high net profit ratio will ensure positive returns of the business and efficient management of
the affairs of business.
8) Return on capital employed = EBIT *100 / Capital employed

EBIT = 7174.37
Capital Employed = Equity + preference share + Reserves & Surplus + Borrowings
= 288.63 + 0 + 38755.13 + 23018.96 = 62062.72
Return on capital employed = 7174.37 *100 / 62062.72
= 11.55 %
11.55% is ROCE ratio which measures efficiency with which investment made by shareholders
and creditors is used in Ultratech cement company. It indicates overall profitability. Higher the
ratio, its better.
9) Return on Equity = Profit after tax *100 / Shareholders fund

Profit after tax = 5755.26
= 288.63 + 0 + 38755.13 = 39043.76
Return on equity = 5755.26 *100 / 39043.76
= 14.74%
This ratio measures overall profitability of company from preference & common shareholder’s
view point. Higher the ratio, higher is the efficiency of management in using resources of the
business. Ultratech cement’s ROE ratio is higher than other two companies.
15
AMBUJA CEMENT LTD.
Common Size Analysis of P & L A/C as on 31-12-2019 to 31-12-2020 (in lakhs)

Particulars 19-Mar 20-Mar Analysis of Analysis of
2019 in (%) 2020 in (%)
Sales 100% 100%

27,103.55 24,516.17
Expenses 83.04% 79.58%

22,506.56 19,510.60
Operating Profit 16.96% 20.42%

4,596.99 5,005.57
Other Income 2.22% 1.17%

600.71 288.02
Depreciation 4.25% 4.74%

1,152.52 1,161.78
Interest 0.63% 0.57%

169.87 140.22
Profit Before Tax 14.29% 16.28%

3,875.31 3,991.59
Tax 4.03% 3.61%

1,092.15 884.75
Net Profit 7.73% 9.65%

2,095.00 2,365.44
INTERPRETATION
1) 2019- for Ambuja Cement Ltd. approximately 83% of every sales amount is spend on expenses
remaining, almost 4% is used on depreciation, 2% earned on other income and 0.63% on interest.
Company earns almost 14% of net income before tax and over 7% in Net Profit after tax on every
sales amount.
2) 2020- for Ambuja Cement Ltd. approximately 79% of every sales amount is spend on expenses
remaining, almost 4% is used on depreciation, 1.17% earned on other income (lower than last year)
and 0.57% on interest. Company earns almost 16% of net income before tax and over 9% in Net
Profit after tax on every sales amount.
16
percentage (%)
Equity Share Capital 397.13 397.13 0 0.00
Reserves 23,680.86 22,360.47 -1320.39 -5.58
Borrowings 41.06 89.98 48.92 119.14
Current Liabilities 16,059.13 16,870.21 811.08 5.05
Total 40,178.18 39,717.79 -460.39 -1.15
Net Block 20,701.34 20,485.97 -215.37 -1.04
Capital Work in 1,554.43 2,421.85 867.42 55.80

Progress
Investments 149.57 167.3 17.73 11.85
Current Assets 17,772.84 16,642.67 -1130.17 -6.36
Total 40,178.18 39,717.79 -460.39 -1.15
INTERPRETATION
1) Current financial position and liquidity position: decreased in working capital indicates weak
financial position of company. Ambuja has fewer current assets in 2020 as compared to current
liabilities in 2020. Management needs to improve current assets and lower current liabilities to be in
a good financial position.
2) Long term- financial position: long-term borrowings has increased compared to last year (119%)
means dependent on outsiders funds and interest liability will increase in future and reduction of net
block (fixed assets) means more cash flow in company. This indicates Ambuja might be planning for
expansion in future and having more liquidity in company.
17
(in lakhs)
Particulars Dec-17 Dec-18 Dec-19 Dec-20
Sales
23,608.69 26,040.94 27,103.55 24,516.17
Index (%) 100%

110.30 114.80 103.84
Expenses
19,751.11 22,030.15 22,506.56 19,510.60
Index (%) 100%

111.54 113.95 98.78
Operating Profit
3,857.58 4,010.79 4,596.99 5,005.57
Index (%) 100%

103.97 119.17 129.76
Other Income
335.38 232.19 600.71 288.02
Index (%) 100%

69.23 179.11 85.88
Depreciation
1,219.45 1,153.94 1,152.52 1,161.78
Index (%) 100%

94.63 94.51 95.27
Interest
205.78 170.50 169.87 140.22
Index (%) 100%

82.86 82.55 68.14
Profit before tax

2,767.73 2,918.54 3,875.31 3,991.59
Index (%) 100%

105.45 140.02 144.22
Tax
822.85 (54.15) 1,092.15 884.75
Index (%) 100%

(6.58) 132.73 107.52
Net profit
1,516.36 2,177.40 2,095.00 2,365.44
Index (%) 100% 143.5938695 138.1598037 155.9946187
18
INTERPRETATION:
1) Sales of Ambuja has gone up from 100%, 110.30% & 114.80% (2017-2019) but in 2020 it
gone down to 103% due to Pandemic crisis.
2) Expenses were similar to sales amount which has lower the operating profit of Ambuja. 3) In
2019, other income was much higher compared to other years which means company has more
non-operating earnings. Also in lockdown (2020), business were on hold so other income has
gone down.
4) Depreciation of Ambuja were at same pace in all years.
5) Interest has gone down from 100% to 68% (2017-2020), means company has reduced their
debt/ loan burden.
6) Net profit has increased by 55% from 2017 to 2020.
19
Ratio analysis for AMBUJA CEMENT LTD.

Current Assets = 16642.67 ; Current Liabilities = 16870.21
Current Ratio = 16642.67 / 16870.21
= 0.98:1
Current ratio is approx. 1 which means company have same current assets and current liabilities.
Its ideal for Ambuja company to increase its current assets more to pay back its short-term
liabilities in future.
Liquid assets = Current assets – Inventories Current Liabilities = 16870.21 = 16642.67 –
1648.58 = 14994.09
Liquid ratio = 14994.09 /16870.21
= 0.88:1
May company face difficulties to meet its short-term obligations using most liquid assets as Liquid
ratio is less than 1. Its ideal to have 1 or more than 1 ratio for liquid ratio.

= 397.13 + 0 + 22360.47 = 22757.6
= 0.004:1
Ratio is less than 1 indicates that the portion of assets provided by stockholders is greater than the
portion of assets provided by creditors. Creditors usually like a low debt to equity ratio because a
low ratio (less than 1) is the indication of greater protection to their money.

= 397.13 + 0 + 22360.47 = 22757.6
Proprietor Ratio = 22757.6 / 39717.79
= 0.57:1
A higher proprietary ratio indicates a strong financial position of company and greater security for
creditors. Ambuja company has approx. 57% contribution of stockholders in total capital.
20
Total Assets = 39717.79 Debt = Long Term borrowings = 89.98
= 441.4
6) Debtors Turnover ratio = Net credit sales / Average trade receivables Sales =
24516.17 Average Trade receivables = 561.13 Debt Turnover ratio = 24516.17 /
561.13
= 43.6 Times
Debtor’s collection period = 365 / Debtors turnover Ratio = 365 / 43.6
= 8 Days
Ambuja having short collection period (8 days) means prompt collection and better
management of receivables.
Net Profit = 2365.44 Sales = 24516.17
Net Profit Ratio = 2365.44 *100 / 24516.17
=9.64%
Net profit ratio is used to measured the overall profitability of business.

EBIT = 4131.81
Capital Employed = Equity + preference share + Reserves & Surplus +
Borrowings = 397.13 + 0 + 22360.47 + 89.98 = 22847.58
= 18%
ROCE of Ambuja company is good compared to other two companies. Managers use this ratio
for various financial decision. This ratio also influences market price of shares.

= 397.13 + 0 + 22360.47 = 22757.6
Return on equity = 2365.44 *100 / 22757.6
= 10.39%
business.
21
ACC LTD.
Common Size Analysis of Profit & Loss A/C as on 31-12-2019 to 31-12-2020 (in
lakhs)
Particulars 19-Mar 20-Mar Analysis of 2019 Analysis of 2020
in (%) in (%)
Sales 15,657.55 13,785.98 100% 100%
Expenses 13,244.77 11,430.87 84.59% 82.92%
Operating Profit 2,412.78 2,355.11 15.41% 17.08%
Other Income 332.45 49.66 2.12% 0.36%
Depreciation 606.44 638.84 3.87% 4.63%
Interest 86.27 57.08 0.55% 0.41%
Profit Before Tax 2,052.52 1,708.85 13.11% 12.39%
Tax 674.98 278.59 4.31% 2.02%
Net Profit 1,377.41 1,430.18 8.79% 10.37%
INTERPRETATION
1) 2019- for ACC LTD. Approximately 84% of every sales amount is spend on expenses and 15% of
every sales amount is left in operating profit to cover remaining expenses. Out of 15% remaining,
almost 3% is used on depreciation, 2% earned on other income and 0.55% on interest. Company
earns almost 13% of net income before tax and over 8% in Net Profit after tax on every sales amount.
2) 2020- for ACC LTD. Approximately 82% of every sales amount is spend on expenses and 17% of
every sales amount is left in operating profit to cover remaining expenses. Out of 17% remaining,
almost 4-5% is used on depreciation, 0.36% earned on other income (much lower than last year) and
0.41% on interest. Company earns almost 12% of net income before tax and over 10% in Net Profit
after tax on every sales amount.
22
percentage(%)
Equity Share Capital 187.99 187.99 0 0.00
Reserves 11,355.78 12,511.14 1155.36 10.17
Borrowings - 83.98 -83.98 0.00
Current Liabilities 5,592.21 5,417.12 -175.09 -3.13
Total 17,135.98 18,200.23 1064.25 6.21
Net Block 7,026.73 6,694.44 -332.29 -4.73
Capital Work in 445.67 548.11 102.44 22.99

Progress
Investments 116.18 129.27 13.09 11.27
Current Assets 9,547.40 10,828.41 1281.01 13.42
Total 17,135.98 18,200.23 1064.25 6.21
INTERPRETATION
1) Current financial position and liquidity position: ACC has reduced current liability by 3% and
current assets has increased at 13%. This has positive impact on working capital which indicates
improved financial position of company
2) Long term- financial position: ACC has no borrowings in 2019 but in 2020 company took
outsider’s fund. long-term borrowings in 2020 means dependent on outsider’s funds and interest
liability will increase in future and reduction of net block (fixed assets) means more cash flow in
company. This indicates company might be planning for expansion in future and having more
liquidity in company.
23
(in lakhs)
Particulars Dec-17 Dec-18 Dec-19 Dec-20
Sales
13,285.13 14,801.62 15,657.55 13,785.98
Index (%) 100%

111.41 117.86 103.77
Expenses
11,369.77 12,753.50 13,244.77 11,430.87
Index (%) 100%

112.17 116.49 100.54
Operating Profit
1,915.36 2,048.12 2,412.78 2,355.11
Index (%) 100%

106.93 125.97 122.96
Other Income
136.85 152.98 332.45 49.66
Index (%) 100%

111.79 242.93 36.29
Depreciation
643.62 603.22 606.44 638.84
Index (%) 100%

93.72 94.22 99.26
Interest
98.53 87.77 86.27 57.08
Index (%) 100%

89.08 87.56 57.93
Profit before tax

1,310.06 1,510.11 2,052.52 1,708.85
Index (%) 100%

115.27 156.67 130.44
Tax
385.55 (10.51) 674.98 278.59
Index (%) 100%

(2.73) 175.07 72.26
Net profit
924.41 1,520.47 1,377.41 1,430.18
Index (%) 100% 164.4800467 149.0042297 154.7127357
24
INTERPRETATION:
1) Sales of ACC has gone up from 100%, 111.41% & 117.86% (2017-2019) but in 2020 it
gone down to 103% due to Pandemic crisis.
2) Expenses were similar to sales amount which has lower the operating profit of ACC. 3) In
2019, other income was doubled up as compared to 2017 which means company has more
non-operating earnings. Also in lockdown (2020), business were on hold so other income has
gone down.
4) Depreciation of ACC were at same pace in all years.
5) Interest has gone down drastically from 100% to 50% (2017-2020), means company has
reduced their debt/ loan burden.
6) Net profit has increased 50% from 2017 to 2020.
25
Ratio analysis for ACC LTD.

Current Assets = 10828.41; Current Liabilities = 5417.12
Current Ratio = 10828.41 / 5417.12
= 1.99:1
Current ratio of ACC company is ideal (2:1). Hence company will be able to pay back its
obligation. It signifies a good company for creditors point of view.

Liquid assets = Current assets – Inventories Current Liabilities = 5417.12 =
10828.41 – 901.27 = 9927.14
Liquid ratio = 9927.14 /5417.12
= 1.83:1
Having liquid ratio more than 1 indicates company’s ability to meet its short-term obligations
with its most liquid assets.

= 187.99 + 0 + 12511.14 = 12699.13
= 0.006:1
Ratio is less than 1 indicates that the portion of assets provided by stockholders is greater than
the portion of assets provided by creditors. Creditors usually like a low debt to equity ratio
because a low ratio (less than 1) is the indication of greater protection to their money.

= 187.99 + 0 + 12511.14 = 12699.13
Proprietor Ratio = 12699.13 / 18200.13
= 0.69:1
A higher proprietary ratio indicates a strong financial position of company and greater security
for creditors. ACC company has approx. 70% contribution of stockholders in total capital.
26
Debt = Long Term borrowings = 83.98
= 216.7
6) Debtors Turnover ratio = Net credit sales / Average trade receivables Sales =
13785.98 Average Trade receivables = 451.41 Debt Turnover ratio = 13785.98 /
451.41
= 30.5 Times
Debtor’s collection period = 365 / Debtors turnover Ratio = 365 / 30.5
= 11.9 = 12 Days
ACC company having short collection period (8 days) means prompt collection and better
management of receivables.
Net Profit = 1430.18 Sales = 13785.98
Net Profit Ratio = 1430.18 *100 / 13785.98
=10.37 %
ACC’s Net profit is 10% from its primary operations.

EBIT = 1765.93
Capital Employed = Equity + preference share + Reserves & Surplus +
Borrowings = 187.99 + 0 + 12511.14 + 83.98 = 12783.11
= 13 %
ROCE measures the success of ACC’s generating satisfactory profit on capital invested which
is 13%.

= 187.99 + 0 + 12511.14 = 12699.13
Return on equity = 1430.18 *100 / 12699.13
= 11.2%
business.
27
SUGGESTIONS & SOLUTIONS
RATIOS ULTRATEC AMBUJA ACC LTD
H CEMENT CEMENT LTD
LTD
Current ratio 0.88:1 0.98:1 1.99:1
Liquid ratio 0.64:1 0.88:1 1.83:1
Debt-Equity ratio 0.59:1 0.004:1 0.006:1
Proprietor ratio 0.49:1 0.57:1 0.69:1
Total assets to debt ratio 3.44 441.4 216.7
Debtors Turnover ratio 17.8 times 43.6 times 30.5 times
Debtors collection period 21 days 8 days 12 days
Net profit ratio 13.56% 9.64% 10.37%
Return on capital employed 11.55% 18% 13%
Return on equity 14.74% 10.39% 11.2%
ULTRATECH:
• Company needs to improve their debt collection period so that credit sales can turn into
cash & more inflows of cash can be used to invest more in company and meet their short
long term expenses or liabilities.
• Company’s interest liability is high, so managers need to lower their dependency on
outsiders funds and liabilities.
• Though Sales increased in 2018-2019 at good pace but Net Profit has decreased due to
expenses. Hence expenses need to be controlled to increased operating profit and net profit
more.
AMBUJA:
• Though borrowings is low of Ambuja but has increased compared to 2019, which will
increased interest liabilities in future and reduce net profit of company. So management
need to control this expenses by increasing sales or increasing other income to see a
good net profit of company.
ACC:
• Company is good in handling short-term liabilities.
• Compared to other two companies ACC’s sale is lower.
• Lower Other income has affected profitability, so company need to focus on increasing
operating or non-operating earnings which may increase their Net Profits also.
CONCLUSION
• Firstly, Ambuja’s overall financial & management aspects of business is good compared to
other two companies.
• ACC’s current financial position & liquidity position is good
• UltraTech’s sales numbers are good.
28

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A Project Report

Analysis of Financial Statement on Cement companies

Dr. Hetal Vyas

Jaini Shah (202100620010249)

Vishwa Jain (202100620010149)

Hetvi Shah (202100620010247)

Pankti shah (202100620010256)

1 Introduction of Financial Statement Analysis 3

3 Introduction of Cement Industries 7

4 Analysis of UltraTech Cement ltd. 10

5 Analysis of Ambuja ltd. 16

6 Analysis of ACC ltd. 22

The types of financial analysis are as follow:

1. Vertical Analysis i.e. Common Size Statements

Inter period comparison

Total Liabilities 100 100

Total Assets 100 100

Rest of other liabilities are compared with total liabilities (100%)

Total Liabilities 100 100

Total Assets 100 100

Rest of other Assets are compared with total Assets (100%)

Inter firm Comparison

(1) (2) (3) = (1) – (2) (3)(1) *100

(1) (2) (3) = (1) – (2) (3)(1) *100

Ratio analysis is a quantitative method of gaining insight into a company’s liquidity,

INTRODUCTION OF THE COMPANIES

They also commissioned captive power plants in Madhya Pradesh.

Sales 100% 100%

Expenses 82.28% 78.21%

Operating Profit 17.72% 21.79%

Other Income 0.84% 1.53%

Depreciation 5.91% 6.42%

Interest 4.29% 4.69%

Profit Before Tax 8.37% 12.21%

Tax 2.58% (1.33%)

Net Profit 5.79% 13.56%

Equity Share capital 274.64 288.63 13.99 5.09

Reserves 28,087.65 38,755.13 10667.48 37.98

Borrowings 25,337.00 23,018.96 -2318.04 -9.15

Current liabilities 22,826.08 17,151.09 -5674.99 -24.86

Total 76,525.37 79,213.81 2688.44 3.51

Net block 56,644.62 57,150.96 506.34 0.89

Capital Work in Progress 919.59 -233.73 -20.27

Investments 2,921.33 5,928.69 3007.36 102.94

Current assets 15,806.10 15,214.57 -591.53 -3.74

Total 76,525.37 79,213.81 2688.44 3.51

Index (%) 100%

Index (%) 100%

Index (%) 100%

Index (%) 100%

Index (%) 100%

Index (%) 100%

Profit before tax

Index (%) 100%

Index (%) 100%

1) Current Ratio = Current Assets / Current Liabilities

2) Liquid Ratio = Liquid Assets / Current Liabilities

3) Debt to equity ratio = Debt/Equity (Shareholder’s Fund)

4) Proprietor Ratio = Shareholder’s fund / Total assets

6) Debtors Turnover ratio = Net credit sales / Average trade receivables

8) Return on capital employed = EBIT *100 / Capital employed

9) Return on Equity = Profit after tax *100 / Shareholders fund

Common Size Analysis of P & L A/C as on 31-12-2019 to 31-12-2020 (in lakhs)

Sales 100% 100%