APROJECT REPORT

ON

FINANCIAL STATEMENT ANALYSIS OF ACC LIMITED

SUBMITTED IN PARTIAL FULFILLMENT OF

BACHELOR OF BUSINESS ADMINISTRATION
(BBA)

SAVITRIBAI PHULE PUNE UNIVERSITY

SUBMITTED BY
Nitin Vinayakrao
Darshan Mahadev Margale
Deshmukh
Seat No: 13426

UNDER THE GUIDANCE OF

(PROF. AMEYA PATIL)

SMT. KASHIBAI NAVALE COLLEGE OF

COMMERCE
PUNE 411004
2020-2021
[2019-2020]
 SINHGAD TECHNICAL EDUCATION SOCIETY,S
SMT. KASHIBAI NAVALE COLLEGE OF COMMERC
(Affiliated to University of pune and Recognized by Govt. of Maharashtra)
19/15 Erandwane Smt. Khilare Marg. Off Karve Road. Pune 411004

CERTIFICATE

Nitin Mahadev
This is to certify that Mrs Darshan Vinayakrao Margale
Deshmukh who is a Bonafide
student of Smt. Kashibai Navale College of Commerce, Erandwane, Pune has
worked on Project titled “Financial Statement Analysis of ACC Limited ”
and has successfully completed the project work in partial fulfilment
of award of degree of Bachelor of Business Administration (BBA).
This report is the record of student’s own efforts under our supervision and
guidelines.

Prof. Ameya Patil Dr. S. V. Deshpande

(Project Guide) (Principal)

Internal Examiner External Examiner

Date:

Place:

2
 DECLARATION

I,Darshan
Nitin Mahadev
Vinayakrao Margale
Deshmukh hereby declare that this is the record of

authentic work carried out by me during the academic year 2019-2020

and has not been submitted to any other university or institute the
award of any degree.

Regards
Darshan
Nitin Vinayakrao
Mahadev Deshmukh
Margale

3
 ACKNOWLEDGEMENT

A wave of elation sweeps me off my feet, as I take another step forward in my

academic pursuit towards excellence with the completion of this project.I have
taken efforts in this project. However, it would not have been possible without
the kind support and help of many individuals and organizations. I would like to
extend my sincere thanks to all of them.

I would like to express my very special gratitude and heartfelt thanks to our
beloved principalof Smt. Kashibai Navale College of Commerce
Dr.S.V.DESHPANDE.

I am highly indebted to Prof. Ameya Patil for his guidance and constant
supervision as well as for providing necessary information regarding the project
& also for his support in completing the project.

I would like to express my gratitude towards my parents &my friends for their
kind co-operation and encouragement which help me in completion of this
project.

I once again thanks all those who really helped and appreciated my work to
design this project report.

4
 INDEX

Sr.No. Particulars Page No.

1 Research Methodology 06
 Title
 Objective
 Hypothesis

2 Background 07-08
 Introduction
 Meaning and Definition
 Advantages of Ratio analysis

3 Classification of Ratios 10-22

4 Company Background 23-24

 ACC Limited

5 Calculations of Financial Ratios 25-32

6 Summary Sheet 33

7 Conclusion 34

7 Bibliography 35

5
Title: “ANALYSIS OF FINANCIAL STATEMENTS OF ACC
LTD.USING RATIO ANALYSIS TECHNIQUE”

OBJECTIVES:-

 To compare the performance of the companies in Indian market.

 To point out the financial condition of business whether it is strong,
questionable or poor and enables the management to take necessary steps.
 To throw the light on the degree of efficiency in the management and the
effectiveness in the utilisation of its assets.
 To pin point specific areas that reflect improvement in with compare to
their competitors.
 To take investment decision by Inter-firm & Intra-firm comparison.

HYPOTHESIS:-

1. HO:- Comparison leads to best decision making.

Best management practices enhance the efficiency.
Time movement leads to gradual improvement in operations.

2. H1: - Comparison may not be up to the extent.

Best management practices are only better to some extent.
Time movement can have negative effect of operation.

6
Background:-
The term “ratio analysis” refers to the analysis of the financial statements in
conjunction with the interpretations of financial results of a particular period of
operations, derived with the help of 'ratio'. Ratio analysis is used to determine
the financial soundness of a business concern.
Meaning and Definition of Ratio Analysis:-
Ratio analysis is a conceptual technique which dates back to the inception of
accounting, as a concept. Financial analysis as a scientific tool is used to carry
out the calculations in the area of accounting. In order to appraise the valid and
existent worth of an enterprise, financial tool comes handy, regularly. Besides,
it also allows the firms to observe the performance spanning across a long
period of time along with the impediments and shortcomings. Financial analysis
is an essential mechanism for a clear interpretation of financial statements. It
aids the process of discovering, the existence of any cross-sectional and time
series linkages between various ratios.
Formerly, Security qualified as a major requisite for banks and financial
institutions, to consider and grant loans and advances. However, there’s been a
complete paradigm shift in the structure. Currently, lending is based on the
evaluation of the actual need of the firms. Financial viability of a proposal, as a
base to grant loans, is now been given precedence over security. Further, an
element of risk is an imperative in every business decision. Credits, run a higher
risk, as a part of any decision making in business and so, Ratio analysis and
other quantitative techniques mitigate the risk to some extent by providing a fair
and rational assessment of risks.
Ratio analysis broadly explains the process of computing, acts as a vital tool in
determination and presentation of the relationship of related items and groups of
items of the financial statements. Financial position of a unit is concretely and
clearly encapsulated by the means of ratio analysis. The significance of Ratio
Analysis for a holistic Financial Analysis remains unflinchingly supreme.
Ratio can be used in the form of percentage, Quotient and Rates. In other words,
it can be expressed as a to b; a: b (a is to b) or as a simple fraction, integer and
decimal. A ratio is calculated by dividing one item or figure by another item or
figure.

7
ANALYSIS OF RATIOS:-
Analysis using ratios can be done in following ways.
 Analysis of an individual (or) Single Ratio
 Analysis of referring to a Group of Ratio
 Analysis of ratios by Trend
 Analysis by inter-firm comparison

8
ADVANTAGES OF RATIO ANALYSIS:-
In order to establish the relationship between two accounting figures,
application of Ratio Analysis is necessary. Application of the same provides the
significant information to the management or users who can analyse the
business situation. It also facilitates meaningful and productive monitoring of
the annual performance of the firm. Illustrated below are the advantages of ratio
analysis:
 It facilitates the accounting information to be summarized and
simplified in a concise and concrete form which is comprehensible
to the user.
 It depicts the inter-relationship between the facts and figures of
various segments of business which are instrumental in taking
important financial decisions.
 Ratio analysis clears all the impediments and inefficiencies related
to performance of the firm/individual.
 It equips the management with the requisite information enables
them to take prompt business -decisions.
 It helps the management in effectively discharging its
functions/operations such as planning, organizing, controlling,
directing and forecasting.
 Ratio analysis provides a detailed account of profitable and
unprofitable activities. Thus, the management is able to concentrate
on unprofitable activities and consider the necessary steps to
overcome the existential shortcomings.
 Ratio analysis is used as a benchmark for effective control of
performance of business activities.
 Ratios are an effectual means of communication and informing
about financial soundness made by the business concern to the
proprietors, investors, creditors and other parties.
 Ratio analysis is an effective tool which is used for measuring the
operating results of the enterprises.
 It facilitates control over the operation as well as resources of the
business.
 Ratio analysis provides all assistance to the management to
discharge responsibilities.
 Ratio analysis aids in accurate determination of the performance of
liquidity, profitability and solvency position of the business concern.

9
Classification of Ratios:-

LIQUIDITY
PROFITABILITY RATIOS
RATIOS

TURNOVER RATIOS SOLVENCY RATIOS

10
I. LIQUIDITY RATIOS
Liquidity Ratios are also termed as Short-Term Solvency Ratios. The term
liquidity means the extent of quick convertibility of assets in to money for
paying obligation of short-term nature. Accordingly, Liquidity ratios are useful
in obtaining an indication of a firm's ability to meet its current liabilities, but it
does not reveal h0w effectively the cash resources can be managed. To measure
the liquidity of a firm, the following ratios are commonly used:
(1) Current Ratio.
(2) Quick Ratio (or) Acid Test or Liquid Ratio.
(3) Absolute Liquid Ratio (or) Cash Position Ratio.

(1) Current Ratio:-

Current Ratio establishes the relationship between current Assets and current
Liabilities. It attemptsto measure the ability of a firm to meet its current
obligations. In order to compute this ratio, the following formula is used:

Current ratio=Current Assets

Current Liabilities

The two basic components of this ratio are current assets and current liabilities.
Current asset normally means assets which can be easily converted in to cash
within a year's time. On the other hand, current liabilities represent those
liabilities which are payable within a year.

(2) Quick Ratio (or) Acid Test or Liquid Ratio:-

Quick Ratio also termed as Acid Test or Liquid Ratio. It is supplementary to the
current ratio. The acid test ratio is a more severe and stringent test of a firm's
ability to pay its short-term obligations 'as and when they become due. Quick
Ratio establishes the relationship between the quick assets and current
liabilities. In order to compute this ratio, the below presented formula is used:

Liquid Assets
(Current Assets - Stock and Prepaid Expenses)
Liquid Ratio =
Current Liabilities

11
Quick Ratio can be calculated by two basic components of quick assets and
current liabilities.
Quick Assets = Current Assets - (Inventories + Prepaid expenses)
Current liabilities represent those liabilities which are payable within a year.

(3) Absolute Liquid Ratio:-

Absolute Liquid Ratio is also called as Cash Position Ratio (or) Over Due
Liability Ratio. This ratioestablished the relationship between the absolute
liquid assets and current liabilities. Absolute LiquidAssets include cash in hand,
cash at bank, and marketable securities or temporary investments. TheOptimum
value for this ratio should be one, i.e., 1: 2. It indicates that 50% worth absolute
liquid assets are
Considered adequate to pay the 100% worth current liabilities in time. If the
ratio is relatively lower than one, it represents that the company's day-to-day
cash management is poor. If the ratio is considerably more than one, the
absolute liquid ratio represents enough funds in the form of cash to meet its
short-term
240 A Textbook of Financial Cost and Management AccountingObligations in
time. The Absolute Liquid Can be calculated by dividing the total of the
Absolute
Liquid Assets by Total Current Liabilities. Thus,

Absolute Liquid Ratio =Absolute Liquid Assets

Current Liabilities

12
II. PROFITABILITY RATIOS
The term profitability means the profit earning capacity of any business activity.
Thus, profit earning may be judged on the volume of profit margin of any
activity and is calculated by subtracting costs from the total revenue accruing to
a firm during a particular period. Profitability Ratio is used to measure the
overall efficiency or performance of a business. Generally, a large number of
ratios can also be used for determining the profitability as the same is related to
sales or investments.
The following important profitability ratios are discussed below:
1. Gross Profit Ratio.
2. Operating Ratio.
3. Operating Profit Ratio.
4. Net Profit Ratio.
5. Return on Investment Ratio.
6. Return on Capital Employed Ratio.
7. Earning Per Share Ratio.
8. Dividend Pay-out Ratio.
9. Dividend Yield Ratio.
10. Price Earnings Ratio.
11. Net Profit to Net worth Ratio.

(1) Gross Profit Ratio:-

Gross Profit Ratio established the relationship between gross profit and net
sales. This ratio is calculated by dividing the Gross Profit by Sales. It is usually
indicated as percentage.

Gross Profit Ratio = Gross Profit x 100

Net sales

Gross Profit = Sales – Cost of goods sold

Net Sales = Gross sales – Sales Return (or) Return Inwards.

(2) Operating Ratio:-

Operating Ratio is calculated to measure the relationship between total
operating expenses and sales. The total operating expenses is the sum total of
cost of goodssold, office and administrative expenses andselling and
distribution expenses. In other words, this ratio indicates a firm's ability to cover
13
total operatingexpenses. In order to compute this ratio, the following formula is
used:
Operating Ratio = Operating Cost x 100
Net Sales

Operating Cost= Cost of goods sold + Administrative Expenses

+ Selling and Distribution Expenses

Net Sales= Sales - Sales Return (or) Return Inwards.

(3) Operating Profit Ratio:-

Operating Profit Ratio indicates the operational efficiency of the firm and is a
measure of the firm's ability to cover the total operating expenses. Operating
Profit Ratio can be calculated as:

Operating Profit Ratio = Operating Profit x 100

Net Sales

Operating Profit = Net Sales – Operating Cost

(or)

= Net Sales - (Cost of Goods Sold + Office and

Administrative Expenses + Selling and Distribution Expenses)

(or)

= Gross Profit - Operating Expenses

(Or)

= Net Profit + Non-Operating Expenses -Non-Operating

Income.

Net Sales = Sales - Sales Return (or) Return Inwards.

(4) Net Profit Ratio:-

Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio
(or) Net Profit to Sales Ratio. This ratio reveals the firm's overall efficiency in
operating the business. Net profit Ratio is used to measure the relationship
between net profit (either before or after taxes) and sales. This ratio can be

14
calculated by the following formula:

Net Profit Ratio = Net Profit after Tax x 100

Net Sales

(5) Return on Investment Ratio:-

This ratio is also called as ROL This ratio measures a return on the owner's or
shareholders' investment. This ratio establishes the relationship between net
profit after interest and taxes and the owner's investment. Usually this is
calculated in percentage. This ratio, thus can be calculated as:

Return on Investment Ratio = Net Profit(after interest and tax) x 100

Shareholders fund or investment

Shareholders fund or investment = Equity Share Capital + Preference Share

Capital + Reserves and Surplus – Accumulated Losses.

Net Profit = Net profit – Interest and Tax.

(6) Return on Capital Employed:-

Return on Capital Employed Ratio measures a relationship between profit and
capital employed. This ratio is also called as Return on Investment Ratio. The
term return means Profits or Net Profits. The term Capital Employed refers to
total investments made in the business. The concept of capital employed can be
considered further into the following ways:

(1) Return on Capital Employed = Net Profit after Taxes x 100

Gross Capital Employed

(Or)

(2) Return on Capital Employed =Net Profit after Taxes before Interest x100
Gross Capital Employed

(Or)

(3) Return on Capital Employed = Net Profit after Taxes before Interestx100
Average Capital Employed or
Net Capital Employed

15
(7) Earning Per Share Ratio:-
Earning per Share Ratio (EPS) measures the earning capacity of the concern
from the owner's point of view and it is helpful in determining the price of the
equity share in the market place. Earning per Share Ratio can be calculated as:

Earning per Share Ratio = Net Profit after Tax and Preference dividend x 100
(EPS) No. of Equity Shares

(8) Dividend Pay-out Ratio:-

This ratio highlights the relationship between payment of dividend on equity
share capital and the profits available after meeting tax and preference dividend.
This ratio indicates the dividend policy adopted by the top management about
utilization of divisible profit to pay dividend or to retain or both. The ratio thus,
can be calculated as:

Dividend Pay-Out Ratio = Equity Dividend x 100

Net Profit after Tax and Preference Dividend

(Or)

Dividend Pay-Out Ratio = Dividend per Equity Share x 100

Earning per Equity Share

(9) Dividend Yield Ratio:-

Dividend Yield Ratio indicates the relationship is established between dividend
per share and market value per share. This ratio is a major factor that determines
the dividend income from the investor’s point of view. It can be calculated by
the following formula:

Dividend Yield Ratio = Dividend per Sharex 100

Market Value per Share

(10) Price Earnings Ratio:-

This ratio highlights the earning per share reflected by market share. Price
Earnings Ratio establishes the relationship between the market price of an
equity share and the earning per equity share. This ratio helps to find out
whether the equity shares of a company are undervalued or not. This ratio is
also useful in financial forecasting. This ratio is calculated as:

16
Price Earnings Ratio = Market Price per Equity Share
Earning per Share

17
III. TURNOVER RATIOS
Turnover Ratios may be also termed as Efficiency Ratios or Performance Ratios
or Activity Ratios. Turnover Ratios highlight the different aspect of financial
statement to satisfy the requirements of different parties interested in the
business. It also indicates the effectiveness with which different assets are
vitalized in a business. Turnover means the number of times assets are
converted or turned over into sales. The activity ratios indicate the rate at which
different assets are turned over. Depending upon the purpose, the following
activities or turnover ratios can be calculated:

1. Inventory Ratio or Stock Turnover Ratio (Stock Velocity)

2. Debtor's Turnover Ratio or Receivable Turnover Ratio (Debtor's Velocity)
2 A. Debtor's Collection Period Ratio
3. Creditor's Turnover Ratio or Payable Turnover Ratio (Creditor's Velocity)
3 A. Debt Payment Period Ratio.
4. Working Capital Turnover Ratio
5. Fixed Assets Turnover Ratio
6. Capital Turnover Ratio.

(1) Stock Turnover Ratio:-

This ratio is also called as Inventory Ratio or Stock Velocity Ratio.

Inventory means stock of raw materials, working in progress and finished

goods. This ratio is used to measure whether the investment in stock in trade is
effectively utilized or not. Itreveals the relationship between sales and cost of
goods sold or average inventory at cost price or average inventory at
sellingprice. Stock Turnover Ratio indicates the number of times the stock has
been turned over in business during a particular period. While using this ratio,
care must be taken regarding season and condition. Price trend supply condition
etc. In order to compute this ratio, the following formulae are used:

Stock Turnover Ratio = Cost of Goods Sold

Avg. inventory

(2) Debtor’s Turnover Ratio:-

Debtor's Turnover Ratio is also termed as Receivable Turnover Ratio or
Debtor's Velocity. Receivables and Debtors represent the uncollected portion of
credit sales. Debtor's Velocity indicates the number of times the receivables are
turned over in business during a particular period. In other words, it represents
how quickly the debtors are converted into cash. It is used to measure the
liquidity position of a concern. This ratio establishes the relationship between

18
receivables and sales. Two kinds of ratios can be used to judge a firm's liquidity
position on the basis of efficiency of credit collection and credit policy. They
are (A) Debtor's Turnover Ratio and (B) Debt Collection Period. These ratios
may be computed as:

(1) Debtor’s Turnover Ratio = Net Credit Sales

Avg. Accounts Receivables

Net Credit Sales = Total Sales – (Cash Sales + Sales Return)

Avg. Accounts Receivables = Opening Receivables + Closing Receivables

2

2(A) Debt Collection Period:-

This ratio indicates the efficiency of the debt collection period and the extent to
which the debt have been converted into cash. This ratio is complementary to
the Debtor Turnover Ratio. It is very helpful to the management because it
represents the average debt collection period. The ratio can be calculated as
follows:

Debt Collection Period = Months (or) Days in a Year

Debtor’s Turnover

(3) Creditor’s Turnover Ratio:-

Creditor's Turnover Ratio is also called as Payable Turnover Ratio or Creditor's
Velocity. The creditpurchases are recorded in the accounts of the buying
companies as Creditors to Accounts Payable. The Term Accounts Payable or
Trade Creditors include sundry creditors and bills payable. This ratio establishes
the relationship between the net credit purchases and the average trade creditors.
Creditor's velocity ratio indicates the number of times with which the payment
is made to the supplier in respect ofcredit purchases. Two kinds of ratios can be
used for measuring the efficiency of payable of a business concern relating to
credit purchases. They are: (1) Creditor's Turnover Ratio (2) Creditor's Payment
Period or Average Payment Period. The ratios can be calculated by the
following formulas:

(1) Creditor’s Turnover Ratio = Net Credit Purchases

Avg. Accounts Payables

19
Net Credit Purchases = Total Purchases – Cash Purchases.

Avg. Accounts Payables = Opening Payables + Closing Payables

2

(2) Avg. Payment Period = Months (or) Days in a year

Creditor’s Turnover

(4) Working Capital Turnover Ratio:-

This ratio highlights the effective utilization of working capital with regard to
sales. This ratio represent the firm's liquidity position. It establishes relationship
between cost of sales and networking capital. This ratio is calculated as follows:

Working Capital Turnover Ratio = Net Sales

Working Capital

Net Sales = Gross Sales – Sales Return

Working Capital = Current Assets – Current Liabilities.

(5) Fixed Asset Turnover Ratio:-

This ratio indicates the efficiency of assets management. Fixed Assets Turnover
Ratio is used to measure the utilization of fixed assets. This ratio establishes the
relationship between cost of goods sold and total fixed assets. Higher the ratio
highlights a firm has successfully utilized the fixed assets. If the ratio is
depressed, it indicates the underutilization of fixed assets. The ratio may also be
calculated as:

Fixed Asset Turnover Ratio = Cost of Goods Sold

Total Fixed Assets

(6) Capital Turnover Ratio:-

This ratio measures the efficiency of capital utilization in the business. This
ratio establishes the relationship between cost of sales or sales and capital
employed or shareholders' fund. This ratio may be calculated as:

Capital Turnover Ratio = Cost of Sales

Capital Employed

Capital Employed = Shareholder’s Funds + Long-Term Loans.

20
IV. SOLVENCY RATIOS

The term 'Solvency' generally refers to the capacity of the business to meet its
short-term and long-term obligations. Short-term obligations include creditors,
bank loans and bills payable etc. Long-term obligations consists of debenture,
long-term loans and long-term creditors etc. Solvency Ratio indicates the sound
financial position of a concern to carryon its business smoothly and meet its all
obligations. Liquidity Ratios and Turnover Ratios concentrate on evaluating the
short-term solvency of the concern have already been explained. Now under this
part of the chapter only the long-term solvency ratios are dealt with. Some of
the important ratios which are given below in order to determine the solvency of
the concern:
(1) Debt - Equity Ratio
(2) Proprietary Ratio
(3) Capital Gearing Ratio
(4) Debt Service Ratio or Interest Coverage Ratio

(1) Debt – Equity Ratio:-

This ratio also termed as External - Internal Equity Ratio. This ratio is
calculated to ascertain the firm's obligations to creditors in relation to funds
invested by the owners. The ideal Debt Equity Ratio is 1: 1. This ratio also
indicates all external liabilities to owner recorded claims. It may be calculated
as,

Debt – Equity Ratio = Total Long-term Debt

Total Long-term Funds

(2) Proprietary Ratio:-

Proprietary Ratio is also known as Capital Ratio or Net Worth to Total Asset
Ratio. This is one of the variant of Debt-Equity Ratio. The term proprietary
fund is called Net Worth. This ratio shows the relationship between
shareholders' fund and total assets. It may be calculated as:

Proprietary Ratio = Shareholder’s Fund

Total Assets

(3) Capital Gearing Ratio:-

This ratio also called as Capitalization or Leverage Ratio. This is one of the
Solvency Ratios. The term capital gearing refers to describe the relationship
between fixed interest and/or fixed dividend bearing securities and the equity
shareholders' fund. It can be calculated as shown below:
21
Capital Gearing Ratio = Equity Share Capital
Fixed Interest Bearing Funds

(4) Debt Service Ratio:-

Debt Service Ratio is also termed as Interest Coverage Ratio or Fixed Charges
Cover Ratio. This ratio establishes the relationship between the amount of net
profit before deduction of interest and tax and the fixed interest charges. It is
used as a yardstick for the lenders to know the business concern will be able to
pay its interest periodically. Debt Service Ratio is calculated with the help of the
following formula:

Debt Service Ratio = Net Profit after Interest and Tax

Fixed Interest Charges

22
 ACC Limited

Corporate Identity:-

Company Profile:-

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete.

ACC's operations are spread throughout the country with 17 modern cement
factories, more than 50 Ready mix concrete plants, 21 sales offices, and several
zonal offices. It has a workforce of about 9,000 persons and a countrywide
distribution network of over 9,000 dealers.

Since inception in 1936, the company has been a trendsetter and important
benchmark for the cement industry in many areas of cement and concrete
technology. ACC has a unique track record of innovative research, product
development and specialized consultancy services. The company's various
manufacturing units are backed by a central technology support services centre -
the only one of its kind in the Indian cement industry.

ACC has rich experience in mining, being the largest user of limestone. As the
largest cement producer in India, it is one of the biggest customers of the
domestic coal industry, of Indian Railways, and a considerable user of the
country’s road transport network services for inward and outward movement of
materials and products.

Among the first companies in India to include commitment to environmental

protection as one of its corporate objectives, the company installed sophisticated
pollution control equipment as far back as 1966, long before pollution control
laws came into existence. Today each of its cement plants has state-of-the art
pollution control equipment and devices.

ACC plants, mines and townships visibly demonstrate successful endeavours in

quarry rehabilitation, water management techniques and ‘greening’ activities.
The company actively promotes the use of alternative fuels and raw materials
and offers total solutions for waste management including testing, suggestions
for reuse, recycling and co-processing.

23
ACC has taken purposeful steps in knowledge building. We run two institutes
that offer professional technical courses for engineering graduates and diploma
holders which are relevant to manufacturing sectors such as cement. The main
beneficiaries are youth from remote and backward areas of the country.

ACC has made significant contributions to the nation building process by way
of quality products, services and sharing expertise. Its commitment to
sustainable development, its high ethical standards in business dealings and its
on-going efforts in community welfare programmes have won it acclaim as a
responsible corporate citizen. ACC’s brand name is synonymous with cement
and enjoys a high level of equity in the Indian market. It was the first cement
company to figure in the list of Consumer SuperBrands of India.

24
 Calculation of Financial Ratios
Financial Ratios of ACC Limited

I. Liquidity Ratios:
a. Current Ratio:

Current Assets 2016 2017 2018 2019

Inventories 1,112.94 1,134.40 1,122.30 1,256.38
Sundry debtors 339.22 302.76 397.18 410.60
Cash & Bank balance 1,659.92 680.70 505.72 309.78
Other current assets 15.74 28.87 19.53 14.57
Loans & advances 548.25 325.00 340.39 385.77
Current investments 1,293.10 2,377.23 2,038.91 1,301.08

Current Liabilities 2016 2017 2018 2019

Trade payables 2,063.04 660.71 641.64 752.02
Other current liabilities 682.18 1,519.69 1,553.91 2,114.81
Short-term provisions 1,055.41 1,226.88 1,080.75 937.27

Particulars 2016 2017 2018 2019

Current Assets 4,969.17 4,848.96 4,424.03 3,678.18
Current Liabilities 3,800.63 3,407.28 3,276.30 3,804.10
Current Ratio 1.31 1.42 1.35 0.97

b. Quick Ratio:

Particulars 2016 2017 2018 2019

Quick Assets 3,856.23 3,714.56 3,301.73 2,421.80
Quick Liabilities 3,800.63 3,407.28 3,276.30 3,804.10
Quick Ratio 1.01 1.09 1.01 0.64

c. Absolute Liquidity Ratio:

Particulars 2016 2017 2018 2019

Absolute Liquid Assets 1,659.92 3,057.93 2,544.63 1,610.86
Current Liabilities 3,800.63 3,407.28 3,276.30 3,804.10
Absolute Liquid Ratio 0.44 0.90 0.78 0.42

25
II. .Profitability Ratios

a. Gross Profit Ratio:

2016 2017 2018 2019

Sales 10,428.45 11,621.47 11,388.55 11,995.42
Cost of Goods Sold 2,316.85 1,784.34 1,860.87 1,507.00

Particulars 2016 2017 2018 2019

Gross Profit 8,111.60 9,837.13 9,527.68 10,488.42
Net Sales 9,430.00 11,130.00 10,889.00 11,481.00
Gross Profit Ratio 86 88 87 91

b. Operating Profit Ratio:

Particulars 2016 2017 2018 2019

Operating Profit 1921 2196 1629 1507
Net Sales 9430 11130 10889 11481
Operating Profit Ratio 20 20 15 13

c. Net Profit Ratio:

2016 2017 2018 2019

Net profit after tax 1,300.80 1,059.28 1,094.67 1,161.82
Net Sales 9430 11130 10889 11481

Particulars 2016 2017 2018 2019

Net profit after tax 1300.80 1059.28 1094.67 1161.82
Net Sales 9430 11130 10889 11481
Net Profit Ratio 13.79 9.52 10.05 10.12

26
 d. Return On Investment Ratio:

2016 2017 2018 2019

Net Profit 1,300.80 1,059.28 1,094.67 1,161.82
Shareholders Fund 6,979.05 7,372.43 7,813.38 8,217.68

Particulars 2016 2017 2018 2019

Net profit 1,300.80 1,059.28 1,094.67 1,161.82
Shareholders Fund 6,979.05 7,372.43 7,813.38 8,217.68
ROI Ratio 18.64 14.37 14.01 14.14

e. Return On Capital Employed Ratio:

2016 2017 2018 2019

Fixed Assets 6,847.19 7,079.22 7,677.03 9,003.45
Current Assets 4969.17 4848.96 4424.03 3678.18
Net profit after tax 1,300.80 1,059.28 1,094.67 1,161.82

Particulars 2016 2017 2018 2019

Net profit after tax 1300.8 1059.28 1094.67 1161.82
Gross Capital Employed 11,816.36 11,928.18 12,101.06 12,681.63
ROCE Ratio 11.01 8.88 9.05 9.16

f. Earning Per Share Ratio:

Particulars 2016 2017 2018 2019

Net Profit 1300.8 1059.28 1094.67 1161.82
Outstanding Shares 18.795 18.795 18.795 18.795
EPS Ratio 69.21 56.36 58.24 61.82

g. Dividend Pay-out Ratio:

Particulars 2016 2017 2018 2019

Dividend per equity share 28 30 30 34
Earning per equity share 69.21 56.36 58.24 61.82
Dividend Pay-out Ratio 40.46 53.23 51.51 55.00

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 h. Net Profit To Net Worth Ratio:

2016 2017 2018 2019

Net assets 8016.08 11928.18 12101.06 12681.63
Long-term Liabilities 510.73 85.03 0 0

Particulars 2016 2017 2018 2019

Net Profit 1300.8 1059.28 1094.67 1161.82
Shareholders Net Worth 7505.35 11843.15 12101.06 12681.63
Net Profit to Net Worth 17.33 8.94 9.05 9.16

III. Turnover Ratios:

a. Stock Turnover Ratio:

Particulars 2016 2017 2018 2019

Net Sales 9430 11130 10889 11481
Avg.inventories 1,482.37 1,679.98 1,695.55 1,750.49
Stock Turnover Ratio 6.36 6.63 6.42 6.56

b. Debtors Turnover Ratio:

Particulars 2016 2017 2018 2019

Total Sales 10,428.45 11,621.47 11,388.55 11,995.42
Avg.accounts receivables 419.01 490.6 501.35 602.48
Debtors Turnover Ratio 24.89 23.69 22.72 19.91

c. Debt Collection Period Ratio:

Particulars 2016 2017 2018 2019

Months/Days in a Year 12.00 12.00 12.00 12.00
Debtors turnover 24.89 23.69 22.72 19.91
Debt Coolection Period 0.48 0.51 0.53 0.60

d. Working Capital Turnover Ratio:

Particulars 2016 2017 2018 2019

Net Sales 9430 11130 10889 11481
Working Capital 1168.54 1441.68 1147.73 -125.92
W.C.Turnover Ratio 8.07 7.72 9.49 -91.18

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 e. Fixed Assets Turnover Ratio:

Particulars 2016 2017 2018 2019

Sales 10,428.45 11,621.47 11,388.55 11,995.42
Net Fixed Assets 6,847.19 7,079.22 7,677.03 9,003.45
F.A.Turnover Ratio 1.52 1.64 1.48 1.33

f. Capital Turnover Ratio:

Particulars 2016 2017 2018 2019

Sales 10,428.45 11,621.47 11,388.55 11,995.42
Capital Employed 4215.45 8520.9 8824.76 8877.53
Capital Turnover Ratio 2.47 1.36 1.29 1.35

IV. Solvency Ratios:

a. Debt To Equity Ratio:

2016 2017 2018 2019

Share capital 187.95 187.95 187.95 187.95
Capital Reserve 7.07 7.07 15.07 15.07
P & L a/c 3591.12 3845.79 4158.74 4433.04

Particulars 2016 2017 2018 2019

Total Long-Term Debt 510.73 85.03 0 0
Shareholders Fund 3786.14 4040.81 4361.76 4636.06
Debt-Equity Ratio 0.13 0.02 0.00 0.00

b. Proprietory Ratio:

Particulars 2016 2017 2018 2019

Shareholders Fund 6979.05 7372.43 7813.38 8217.68
Total Assets 8,016.08 11,928.18 12,101.06 12,681.63
Proprietory Ratio 0.87 0.62 0.65 0.65

c. Capital Gearing Ratio:

Particulars 2016 2017 2018 2019

Equity Share Capital 6979.05 7372.43 7813.38 8217.68
Fixed Interest Bearing funds 510.73 85.03 0 0
Capital Gearing Ratio 13.66 86.70 0.00 0.00

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d. Operating Ratio:-

Particulars 2016 2017 2018 2019

Operating Expenses 8316.21 8543.69 8876.49 9495.11
Net sales 9430 11130 10889 11481
Operating Expenses Ratio 88.19 76.76 81.52 82.70

e. Creditors Turnover Ratio:-

Particulars 2016 2017 2018 2019

Net Credit Purchases 168.19 158.75 232.86 194.33
Avg.accounts payables 2557.885 748.105 651.175 696.83
Creditors Turnover Ratio 0.07 0.21 0.36 0.28

f. Average Payment Period:-

Particulars 2016 2017 2018 2019

Days/Months in a year 12 12 12 12
Creditors turnover 0.07 0.21 0.36 0.28
Avg.Payment Period 182.50 56.55 33.56 43.03

g. Defensive Interval Ratio:-

Particulars 2016 2017 2018 2019

Quick Assets 3,856.23 3,714.56 3,301.73 2,421.80
Proj.Daily Cash Requirments 6,193.56 6,387.46 6,544.49 6,993.51
Defensive Interval Ratio 0.62 0.58 0.50 0.35

h. Current Asset Turnover Ratio:-

Particulars 2016 2017 2018 2019

Net Sales 9430 11130 10889 11481
Current Assets 4969.17 4848.96 4424.03 3678.18
Current Assets Turnover
Ratio 1.90 2.30 2.46 3.12

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i. Total Asset Turnover Ratio:

Particulars 2016 2017 2018 2019

Net Sales 9430 11130 10889 11481
Total Assets 8016.08 11928.18 12101.06 12681.63
Total Assets Turnover Ratio 1.18 0.93 0.90 0.91

j. Equity Ratio:-

Particulars 2016 2017 2018 2019

Owners Equity 325 325 325 325
Total Assets 8016.08 11928.18 12101.06 12681.63
Equity Ratio 4.05 2.72 2.69 2.56

k. Capital Employed to Fixed Asset Ratio:-

Particulars 2016 2017 2018 2019

Capital employed 4215.45 8520.9 8824.76 8877.53
Fixed Assets 6847.19 7079.22 7677.03 9003.45
Capital employed to Fixed
Assets 0.62 1.20 1.15 0.99

l. Fixed Assets to Shareholders Equity:-

Particulars 2016 2017 2018 2019

Fixed Assets 6847.19 7079.22 7677.03 9003.45
Shareholders Equity 6979.05 7372.43 7813.38 8217.68
Fixed Assets to Shareholders
equity 0.98 0.96 0.98 1.10

m. Overall Profitability Ratio:-

Particulars 2016 2017 2018 2019

Net Profit 1300.8 1059.28 1094.67 1161.82
Total Assets 8016.08 11928.18 12101.06 12681.63
Overall Profitability Ratio 0.16 0.09 0.09 0.09

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n. Return on Assets Ratio:-

Particulars 2016 2017 2018 2019

PAT 1300.8 1059.28 1094.67 1161.82
Fixed Assets 6847.19 7079.22 7677.03 9003.45
Return On Assets Ratio 19.00 14.96 14.26 12.90

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Summary sheet of financial ratios of ACC Ltd.

Sr. No. Name of Ratio 2016 2017 2018 2019

1 Current Ratio 1.31 1.42 1.35 0.97
2 Quick Ratio 1.01 1.09 1.01 0.64
3 Absolute Liquidity Ratio 0.44 0.9 0.78 0.42
4 Gross Profit Ratio 22 47 44 44
5 Operating Profit Ratio 20 20 15 13
6 Net Profit Ratio 13.79 9.52 10.05 10.12
7 Return on Investment Ratio 18.64 14.37 14.01 14.14
8 Return on Capital Employed Ratio 11.01 8.88 9.05 9.16
9 Earning Per Share Ratio 69.21 56.36 58.24 61.82
10 Dividend Pay-out Ratio 40.46 53.23 51.51 55
11 Net Profit to Net Worth Ratio 17.33 8.94 9.05 9.16
12 Stock Turnover Ratio 6.36 6.63 6.42 6.56
13 Debtors Turnover Ratio 24.89 23.69 22.72 19.91
14 Debt Collection Period Ratio 0.48 0.51 0.53 0.6
15 Working Capital Turnover Ratio 8.07 7.72 9.49 -91.13
16 Fixed Asset Turnover Ratio 1.52 1.64 1.48 1.33
17 Capital Turnover Ratio 2.47 1.36 1.29 1.35
18 Debt-Equity Ratio 0.13 0.02 0 0
19 Proprietary Ratio 0.87 0.62 0.65 0.65
20 Capital Gearing Ratio 13.66 86.7 0 0
21 Debt Service Ratio Fixed Interest Charges are not mentioned
22 Defensive Interval Ratio 0.62 0.58 0.50 0.35
23 Current Asset Turnover Ratio 1.90 2.30 2.46 3.12
24 Total Assets Turnover Ratio 1.18 0.93 0.90 0.91
25 Operating Ratio 88.19 76.76 81.52 82.70
26 Return On Assets Ratio 19.00 14.96 14.26 12.90
27 Creditors Turnover Ratio 0.04 0.14 0.24 0.19
28 Average Payment Period Ratio 30.00 85.71 50.00 63.16
29 Equity Ratio 4.05 2.72 2.69 2.56
30 Capital Employed to Fixed Assets 0.62 1.20 1.15 0.99
31 Fixed Assets to Shareholders Equity 0.98 0.96 0.98 1.10
32 Interest Coverage Ratio
33 Dividend Yield Ratio Market Price is not mentioned
34 Price Earning Ratio Market Price is not mentioned
35 Market Price Ratio Market Price is not mentioned
36 Overall Profitability Ratio 0.16 0.09 0.09 0.09

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 CONCLUSION

ACC is the company studied under ratio analysis. Certain factors of ACC
company were remarkable while there were certain factors which were
commented for improvement. It can be said that the ratio analysis is the good
tool for comparison of financial statement of two or more companies and gives
a scope of improvement in the competitive sector. It should be noted that ratio
analysis is a study which is based on past performance of the business, however
current situations and current working of the business must also be carefully
studied before analysing the financial reports of the company.

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 Bibliography
Books:-
 Financial Management – Ravi M. Kishore
 Management Accounting – Paul

Internet:
 Investopedia.com
 Google.com

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