Description
This is a report highlights financial analysis of Ultratech , Ambuja, ACC.
FINANCIAL ANALYSIS AND REPORTING ASSIGNMENT
REPORT ON
Fianacial analysis of Cement Industry(Ultratech , Ambuja, ACC)
Submitted to:
Prof. Vanadana Mishra
Submitted by:
ANKUR OBEROI ANKUR SRIVASTAVA ESHA RAIZADA MAYANK TIWARI MONA FEROZ
PRAGATI KATIYAR
AMBUJA CEMENT: Ratio Analysis
Balance Sheet of Ambuja Cements ------------------ in Rs. Cr. ------------------
Jun '05 12 mths
Dec '06 18 mths
Dec '07 12 mths
Dec '08 12 mths
Dec '09 12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
270.38 270.38 0.03 0.00 1,908.01 0.00 2,178.42 549.33 578.12 1,127.45 3,305.87 Jun '05
303.37 303.37 1.14 0.00 3,187.21 0.00 3,491.72 317.77 547.61 865.38 4,357.10 Dec '06
304.48 304.48 0.00 0.00 4,356.77 0.00 4,661.25 100.00 230.42 330.42 4,991.67 Dec '07
304.52 304.52 0.34 0.00 5,368.01 0.00 5,672.87 100.00 188.67 288.67 5,961.54 Dec '08
304.74 304.74 0.24 0.00 6,165.92 0.00 6,470.90 100.00 65.70 165.70 6,636.60 Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses
3,709.17 1,463.93 2,245.24 118.10 1,125.06 317.00 45.84 86.27 449.11 145.10 0.26 594.47 0.00 676.70 106.77 783.47 -189.00 6.47
4,542.50 2,053.32 2,489.18 634.93 1,133.12 408.82 89.95 172.36 671.13 313.03 205.74 1,189.90 0.00 929.06 168.68 1,097.74 92.16 7.71
5,231.05 2,271.19 2,959.86 696.79 1,288.94 581.60 145.68 114.94 842.22 237.04 535.85 1,615.11 0.00 1,081.70 493.55 1,575.25 39.86 6.22
5,706.94 2,514.19 3,192.75 1,947.22 332.39 939.75 224.60 123.73 1,288.08 351.82 728.11 2,368.01 0.00 1,412.55 470.56 1,883.11 484.90 4.28
6,224.13 2,784.09 3,440.04 2,714.43 727.01 683.24 152.20 116.64 952.08 292.65 764.04 2,008.77 0.00 1,582.32 674.04 2,256.36 -247.59 2.71
Total Assets
3,305.87
4,357.10
4,991.67
5,961.54
6,636.60
Contingent Liabilities Book Value (Rs)
332.70 16.11 ------------------ in Rs. Cr. -----------------Jun '05
506.71 23.01
1,193.08 30.62
1,224.42 37.26
647.12 42.47
Profit & Loss account of Ambuja Cements
Dec '06
Dec '07
Dec '08
Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
3,025.84 428.79 2,597.05 70.51 6.97 2,674.53 435.52 678.40 106.44 92.97 502.01 61.77 -3.43 1,873.68 Jun '05
7,022.59 796.31 6,226.28 111.07 -10.92 6,326.43 1,007.07 1,239.87 235.98 185.59 1,273.55 122.96 -10.82 4,054.20 Dec '06
6,469.68 798.29 5,671.39 965.04 58.79 6,695.22 953.32 1,004.20 209.46 124.50 1,254.41 140.63 -9.47 3,677.05 Dec '07
7,089.89 907.80 6,182.09 468.18 62.62 6,712.89 1,251.08 1,325.69 266.94 145.61 1,276.80 215.64 -21.19 4,460.57 Dec '08
7,763.93 680.72 7,083.21 180.41 -49.44 7,214.18 1,642.09 1,422.75 274.29 161.66 1,432.55 202.19 -19.33 5,116.20 Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend
730.34 800.85 91.77 709.08 195.41 0.94 512.73 6.08 518.81 50.52 468.29 1,438.16 0.00 189.16
2,161.16 2,272.23 113.23 2,159.00 326.12 1.07 1,831.81 10.17 1,841.98 338.73 1,503.25 3,047.13 0.00 461.24
2,053.13 3,018.17 75.85 2,942.32 236.34 0.47 2,705.51 -194.92 2,510.59 741.49 1,769.10 2,723.73 0.00 532.65
1,784.14 2,252.32 32.06 2,220.26 259.76 1.72 1,958.78 11.28 1,970.06 567.79 1,402.27 3,209.49 0.00 334.97
1,917.57 2,097.98 22.43 2,075.55 296.99 1.57 1,776.99 26.52 1,803.51 585.14 1,218.37 3,474.11 0.00 365.59
Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
26.54
64.69
90.52
56.92
62.13
13,518.83 3.46 90.00 16.11 ------------------ in Rs. Cr. -----------------Jun '05
15,168.2 9 9.91 165.00 23.01
15,223.7 5 11.62 175.00 30.62
15,225.9 9 9.21 110.00 37.26
15,237.1 1 8.00 120.00 42.47
Cash Flow of Ambuja Cements
Dec '06
Dec '07
Dec '08
Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
518.54 548.15 -253.14 -277.31 17.70 68.83 86.53 ------------------ in Rs. Cr. ------------------
1841.60 1796.18 -627.17 -888.86 280.15 97.95 378.10
2712.35 1558.67 -161.59 -1124.44 272.63 378.16 650.79
1969.84 966.22 -274.90 -482.06 209.26 642.58 851.84
1803.30 2129.15 -1196.13 -466.66 466.36 949.11 1415.47
Key Financial Ratios of Ambuja Cements
Jun '05
Dec '06
Dec '07
Dec '08
Dec '09
Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs)
2.00 1.80 5.40 19.21 12.08
2.00 3.30 14.25 41.05 19.66
2.00 3.50 13.49 37.25 27.48
2.00 2.20 11.72 40.60 34.13
2.00 2.40 12.58 46.49 39.35
Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition
71.98 28.12 20.39 25.44 25.29 23.41 17.85 15.93 16.94 21.50 19.24 11.45 11.45 16.94
64.15 34.71 29.13 33.74 29.04 28.29 23.86 23.09 43.76 43.05 41.77 27.56 27.56 43.77
63.92 36.20 31.35 36.26 34.61 23.44 30.53 19.35 38.84 37.95 24.09 30.58 30.58 38.84
63.91 28.85 24.04 24.65 21.17 21.17 22.11 22.11 28.19 24.73 19.07 37.23 37.23 28.19
63.86 27.07 22.32 22.87 20.46 20.46 16.78 16.78 27.04 18.83 18.35 42.45 42.45 27.04
0.76 0.35 0.52 0.52 6.28 0.52 8.24 8.24
1.08 0.70 0.25 0.25 17.61 0.25 19.73 17.17
1.03 0.64 0.07 0.07 26.02 0.07 28.68 27.45
1.26 0.74 0.05 0.05 52.66 0.05 60.58 52.89
0.89 0.57 0.03 0.03 80.15 0.03 93.32 68.63
8.28 58.66 9.55 1.07 0.79 0.70 30.85 7.58 -26.20
15.41 91.70 17.19 2.28 1.43 1.37 43.45 6.26 7.99
9.96 48.14 11.13 1.68 1.14 1.09 30.93 7.00 2.53
7.54 33.39 7.54 1.10 1.05 1.10 36.96 8.01 28.24
11.36 37.60 11.36 1.15 1.08 1.15 14.69 4.58 -12.58
16.76 -17.91
16.17 5.05 19.08
16.80 11.01 20.95
20.23 8.41 19.2
23.18 31.66 18.58
Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times
10.48
8.36
4.9
3.69
2.6
46.06 32.45 48.4 64.89 1.84
34.98 28.73 63.85 70.49 0.49
35.22 31.06 44.44 54.13 0.24
27.94 23.55 63.75 70.81 0.22
35.1 28.19 63.97 71.21 0.11
Jun '05
Dec '06
Dec '07
Dec '08
Dec '09
Earnings Per Share(%) Book Value
3.46 16.11
9.91 23.01
11.62 30.62
9.21 37.26
8 42.47
LIQUIDITY RATIOS
Liquidity is defined as having enough cash (or near-cash assets) to pay your bills when they come due. The liquidity ratios compare the assets that will be converted into cash soon (the numerator) to the bills that will be coming due soon (the denominator). CURRENNT RATIO: The current ratio is a popular financial ratio used to test a company's liquidity (also referred to as its current or working capital position) by deriving the proportion of current assets available to cover current liabilities. The concept behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes). In theory, the higher the current ratio, the better.
Current Ratio = Current Assets Current Liabilitie s
In the above graph we can see that current ratio increased from 0.75 to 1.08 in the year 2006. Further it declined by .05% to 1.03% in year 2007. In year 2008 it increased by . 23% to 1.26. Finally it declined to .89% in the year 2009. Generally it tells for every 1 rupee that company owes how much amount is available to repay its debts. Here in years where ratio was above 1%, in those years current ratio was favorable, telling that current assets are more than current liabilities. But in year 2009 we can see that current ratio is just .89% which tells that current liabilities of company are greater than current assets which is not favorable for the company.
QUICK RATIO: The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The quick ratio is more conservative than the current ratio because it excludes inventory and other current assets, which are more difficult to turn into cash. Therefore, a higher ratio means a more liquid current position. The average for all manufacturing companies is about one (1.0). This average also varies a great deal from one industry to another.
Quick Ratio = Cash + Mkt. Securities + Acc. Receivable Current Liabilitie s
A commonly used variation of the ratio is:
Quick Rati o = Current As sets - Inv entory Current Li abilities
Here we can see that quick ratio of the company is fluctuating. It increased in year 2006 to .7 as compared to .34 in year 2005. Further it declined in year 2007 to .63 and then again it increased to .74 in the year 2008. Finally it declined again in year 2009 by . 17(.74-.57) and reached .57. Here we can see in the year 2009 current ratio is significantly higher, than quick ration, it is a clear indication that the company's current assets are dependent on inventory. Quick ratio indicates the companies’ ability to meet its short term obligations. Since currently the ratio is .57 which is less than 1 so it is not favorable for the company at present.
Working Capital: It is a financial metric which represents operating liquidity available to an organization. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. Net working capital is working capital minus cash (which is a current asset) and minus interest bearing liabilities (i.e. short term debt).
Working Capital = Current Assets ? Current Liabilities
A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash
In the above graph we can see that, there was working capital deficiency in year 2005 i.e. -189. Working capital increased to 92.16 in year 2006. It remained positive in year 2007 but it declined to 39.86 crores. There was drastic increase in working capital due to increase in amount of current assets, as result it increased to 484.9 crores in year 2008. But in year 2009 the amount of current liabilities was greater than current assets which resulted in working capital deficiency i.e. it declined to -247.59. Negative working capital is not favorable for the company as it can’t fulfill its short term obligations and upcoming operational expenses. Thus company has to relook its management of inventories, accounts receivable and payable and cash in order to insure positive working capital.
LEVERAGE RATIOS
Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods 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. It is used to measure a company's mix of operating costs, giving an idea of how changes in output will affect operating income. Fixed and variable costs are the two types of operating costs; depending on the company and the industry, the mix will differ.
Interest coverage ratio: A ratio used to determine how easily a company can pay
interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period.
The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses.
From the above graph we can see that company’s interest coverage ratio is constantly increasing. Initially it was 6.28 in year 2005 but it increased to 17.61 in year in 2006.
Further it kept on increasing and finally reached 80.15 in year 2009. It shows company is generating sufficient revenues to satisfy interest expenses.
Debt-equity ratio: The debt-equity ratio is another leverage ratio that compares a
company's total liabilities to its total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. To a large degree, the debt-equity ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. A lower the percentage of debt-equity ratio means that a company is using less leverage and has a stronger equity position.
D ebt - to - Equity Ratio = Total Debt (or Liabilitie s) Total Equity
Here in the above case we can see that debt-equity ration is constantly declining since year 2005. In year 2005 D/E ratio was .52 but it declined to .25 i.e. almost by half to .25 in year 2006. It further declined to .07 in year 2007 and finally declined more and
reached .03 in year 2009. A lower the percentage of debt-equity ratio means that a company is using less leverage and has a stronger equity position.
TURNOVER OR EFFICIENCY RATIOS
Turnover ratios measure the management’s efficiency and effectiveness in managing the firm’s assets. In general, sales (or a measure of sales, like cost of goods sold) will be in the numerator. We would like for the value of the turnover ratios to be quite high (with the exception of the average collection period). Inventory Turnover: Indicates the number of times a year that the firm’s inventory has been replaced. A low ratio may indicate that the firm has some obsolete inventory, or that possibly, the firm is simply overstocked on inventory. If the inventory turnover is 4 times per year, the company is replacing its inventory approximately every 3 months; if its inventory turnover is 12 times per year, it is replacing its inventory approximately every 30 days (or 1 month).
Sales Inventory
Inventory Turnover =
From the above graph we can see that, in 2005 the inventory turnover ratio was 8.28.It further increase by 7.13 in 2006 and reached to 15.41. But in year 2007 the inventory turn over ratio declined by 5.45 and was 9.96. When we talk about year 2008 there was again a decline by 2.42 and in 2009 the ratio was 11.36 thereby increasing by 3.82. Thus we
can say that the inventory turnover of the company is fluctuating. Inventory turnover ratio of 11.36 in year 2009 tells us that company is replacing its inventory approximately every 30 days (or 1 month). Total Asset Turnover Ratio: The purpose of investing in assets is to generate sales: the higher the sales per dollar invested in total assets, the better. This ratio measures how efficiently the management is achieving its goal.
Sales Total Assets
Total Asset Turnover =
Major fault of the ratio: Total assets are made up of current assets and fixed assets. If the company’s fixed assets are old (and therefore almost fully depreciated), the value of net fixed assets on the balance sheet will be quite small. This, in turn, will make total assets appear to be small and the value of the ratio will be high. This implies that a company with old assets is managing its assets quite efficiently. In fact, the company may not be managing its assets well at all – they are simply old and much depreciated. A company that has recently upgraded its assets by investing in newer equipment may actually be better managed, but its total asset turnover ratio will look inferior to the company with older assets. In spite of this, the total asset turnover ratio is widely used; it’s simply important to know of its major deficiency when using it.
In 2005 the ratio was 0.79 and there was an increase of 0.64 in 2006 as it was 1.43 but in 2007 the Total Assets Turnover Ratio decreased to 1.14, it further decrease by 0.09 in 2008 as it was 1.05 and in 2009 there was a slight increase of 0.03.Therefore we can say that the Total Assets Turnover Ratio of the company is fluctuating. FIXED ASSETS TURNOVER RATIO: IT is the ratio of sales (on the Profit and loss account) to the value of fixed assets (on the balance sheet). It indicates how well the business is using its fixed assets to generate sales. FIXED ASSET TURNOVER RATIO = Net Sales Total Fixed Assets The higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed assets for each dollar of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets.
The Fixed Assets Turnover Ratio in 2005 was 1.07. In 2006 it increased to 2.28, increasing by 1.21.In 2007 it declined to 1.68. Further it declined to 1.1 in year 2008. In 2009 there was a slight increase by 0.05 and it reached to 1.15. Greater the ratio more it is beneficial for the company. Ratio of 1.15 in year 2009 tells that 1.15 times assets were
turned and converted into sales. The ratio was most favorable in year 2006 as its fixed asset turnover was 2.28, which was highest in last 5 years. Debtors Turnover Ratio: It indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.
Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors
The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.
In 2005 the Debtors Turnover Ratio was 58.66.In 2006 there was increase by 33.04 and reached to 91.70.In 2007 it declined by 43.56 and ratio was 48.14. In 2008 it further decrease to 33.39. finally in year 2009 there was slight increase and it reached 37.6. ratio was highest in 2006, it tells that in year 2006 there was most efficient management of
debtors or debtors were most liquid. Lower ratio in year 2008 i.e. 33.39 indicates inefficient management of debtors or less liquid debtors. PROFITABILITY RATIOS A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. These ratios, much like the operational performance ratios, give users a good understanding of how well the company utilized its resources in generating profit and shareholder value. The long-term profitability of a company is vital for both the survivability of the company as well as the benefit received by shareholders. It is these ratios that can give insight into the all important "profit". Return on Assets: The primary purpose of investing in assets is to generate sales, which in turn lead to profits. The return on assets ratio measures the profitability per dollar of investment in the firm. Notice that the ratio doesn’t say anything about how the assets are financed, i.e., where the money comes from (either debt or equity). It simply wants to know how profitable the company is per dollar invested in total assets (no matter where the money comes from to finance those assets).
Earnings After Taxes Total Assets
Return on Assets =
Here we can see that ratio is continuously in creasing over the past 5 years. Initially ratio was 11.45 in year 2005 but it kept on increasing per year and finally reached 42.45 in year 2009. It is good sign for the company. Net Profit Margin: Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.
The profit margin is mostly used for internal comparison. It is difficult to accurately compare the net profit ratio for different entities. Individual businesses' operating and financing arrangements vary so much that different entities are bound to have different levels of expenditure, so that comparison of one with another can have little meaning. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase profits and result in a net loss. Profit margin is an indicator of a company's pricing policies and its ability to control costs. Differences in competitive strategy and product mix cause the profit margin to vary among different companies
Here we can see that net profit margin increased from 16.78 in year 2005 to 22.22 in year 2006. It further increased to 30.53 in year 2007. But after that it kept on declining continuously for both years i.e. the ratio declined from 30.53 to 23.86 in year 2008 and it further declined to 17.85 in year 2009. Return on Equity – This ratio indicates how profitable a company is by comparing its net income to its average shareholders' equity. The return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors.
Widely used by investors, the ROE ratio is an important measure of a company's earnings performance. The ROE tells common shareholders how effectively their money is being employed. Peer Company, industry and overall market comparisons are appropriate; however, it should be recognized that there are variations in ROEs among some types of businesses. In general, financial analysts consider return on equity ratios in the 15-20% range as representing attractive levels of investment quality. While highly regarded as a profitability indicator, the ROE metric does have a recognized weakness. Investors need to be aware that a disproportionate amount of debt in a company's capital structure would translate into a smaller equity base. Thus, a small amount of net income (the numerator) could still produce a high ROE off a modest equity base (the denominator).
We can see that ROE is continuously decreasing since year 2007. In year 2007 it was 24.09, it further declined to 19.07 and then it further declined in year 2009 and reached 18.35. Here we can say that earning of shareholders of the company is continuously decreasing which is not a good sing for the company. Return on Investment: A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. The return on investment formula:
Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.
From the above graph we can see that ROI was 16.94 in year 2005. It increased drastically to 43.77 in year 2006. But after that it kept on declining for all the 3 years. It declined to 38.84 in year 2007. Further it declined more in year 2008 and reached 28.19. finally it declined more and reached 27.04 in year 2009.
ACC RATIOS ANALYSIS
Balance Sheet of ACC
------------------ in Rs. Cr. -----------------Dec '05
Dec '06
Dec '07
Dec '08
Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital
184.72
187.48
187.83
187.88
187.94
Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
184.72 0.82 0.00 1,951.21 0.00 2,136.75 950.12 121.30 1,071.42 3,208.17 Dec '05
187.48 0.28 0.00 2,955.16 0.00 3,142.92 720.96 50.20 771.16 3,914.08 Dec '06
187.83 0.10 0.00 3,964.78 0.00 4,152.71 266.03 40.38 306.41 4,459.12 Dec '07
187.88 0.00 0.00 4,739.85 0.00 4,927.73 450.00 32.03 482.03 5,409.76 Dec '08
187.94 0.08 0.00 5,828.20 0.00 6,016.22 550.00 16.92 566.92 6,583.14 Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets
4,628.64 1,722.29 2,906.35 290.95 333.80 600.95 199.17 100.60 900.72 533.54 2.19 1,436.45 0.00 1,449.02 316.77 1,765.79 -329.34 6.41 3,208.17
4,816.25 1,893.76 2,922.49 558.42 543.09 624.13 213.96 152.98 991.07 569.21 467.19 2,027.47 0.00 1,596.50 541.83 2,138.33 -110.86 0.94 3,914.08
5,464.07 2,149.35 3,314.72 649.19 844.81 730.86 289.29 78.87 1,099.02 544.31 664.61 2,307.94 0.00 1,991.27 666.27 2,657.54 -349.60 0.00 4,459.12
5,835.67 2,365.97 3,469.70 1,602.86 679.08 793.27 310.17 87.57 1,191.01 779.76 896.67 2,867.44 0.00 2,245.39 963.93 3,209.32 -341.88 0.00 5,409.76
6,826.27 2,667.98 4,158.29 2,156.21 1,475.64 778.98 203.70 95.64 1,078.32 714.55 650.74 2,443.61 0.00 2,558.73 1,091.88 3,650.61 -1,207.00 0.00 6,583.14
Contingent Liabilities Book Value (Rs)
282.42 115.76
341.56 167.81
890.62 221.33
1,734.21 262.56
840.52 320.45
Profit & Loss account of ACC
------------------ in Rs. Cr. ------------------
Dec '05
Dec '06
Dec '07
Dec '08
Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
3,723.51 539.71 3,183.80 300.84 45.26 3,529.90 1,078.84 299.52 184.84 157.65 838.12 84.88 0.00 2,643.85 Dec '05
6,467.84 736.09 5,731.75 247.87 -29.25 5,950.37 1,513.55 430.98 318.02 262.45 1,298.32 189.08 0.00 4,012.40 Dec '06
7,865.11 970.32 6,894.79 369.35 6.93 7,271.07 1,843.65 517.56 352.73 344.17 1,547.30 354.51 0.00 4,959.92 Dec '07
8,300.18 1,070.21 7,229.97 252.84 0.33 7,483.14 1,180.48 1,598.96 413.04 362.90 1,620.65 270.99 0.00 5,447.02 Dec '08
8,803.17 781.58 8,021.59 137.40 28.74 8,187.73 1,233.42 1,539.65 367.71 421.69 1,658.79 262.72 0.00 5,483.98 Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
585.21 886.05 66.19 819.86 164.64 6.46 648.76 46.93 695.69 140.17 544.18 1,565.01 0.00 147.61 20.70 1,845.08 29.49 80.00 115.76
1,690.10 1,937.97 75.19 1,862.78 254.61 6.24 1,601.93 14.55 1,616.48 369.10 1,231.84 2,498.85 0.00 280.92 39.40 1,872.78 65.78 150.00 167.81
1,941.80 2,311.15 73.87 2,237.28 305.43 1.55 1,930.30 -0.16 1,930.14 491.70 1,438.59 3,116.27 0.00 375.02 63.74 1,876.24 76.67 200.00 221.33
1,783.28 2,036.12 39.96 1,996.16 294.18 0.00 1,701.98 35.39 1,737.37 524.60 1,212.79 4,266.54 0.00 375.33 63.79 1,876.82 64.62 200.00 262.56
2,566.35 2,703.75 84.30 2,619.45 342.09 0.00 2,277.36 21.54 2,298.90 688.93 1,606.73 4,250.56 0.00 431.76 73.38 1,877.40 85.58 230.00 320.45
CURRENT RATIO 0.81348858 QUICK RATIO 0.473159322 CASH RATIO 0.870460247 1.019698 0.898128 0.920759 0.695569 0.656278 0.593436 0.646296 0.455987 0.948156 0.86845 0.893473 0.66937
DEBT EQUITY RATIO 0.501425061
0.245364
0.073786
0.09782
0.094232
INTEREST COVERAGE RATIO 13.38646321
25.77431
31.28672
50.95395
32.07295
INVENTORY TURNOVER RATIO 2.387916 DIH 150.7591 151.4806 255.4198 224.758 2.376543 1.409444 1.601723
TOTAL ASSETS TURNOVER RATIO 0.992403769 PROFIT MARGIN RATIO 0.17092154 DEBTORS TURNOVER RATIO 15.98533916 RETURN ON ASSETS(%) 16.96231808 RETURN ON EQUITY 0.254676495 AVERAGE COLLECTION PERIOD 1413.558014
1.464393
1.546222
1.336468
1.218505
0.214915 26.78889 31.47202
0.208649 23.83349 32.26175
0.167745 23.3097 22.41855
0.200301 39.37943 24.40674
0.391941
0.346422
0.246115
0.267066
918.505
1039.195
1462.729
1347.98
CURRENT RATIOS-Current ratios of ACC cement for the year 06 has increased from 05 because of the increase in the cash balance and inventory and less increase in current liability, but in the year 07 it decreased as current liabilities are still increasing but comparatively assets are not increasing that much but again in the year in 08 the current ratio increased to 0.893 &then in 09 it decreased to 0.66.in all the 5 years the comfort level of 1:1 thus it shows the company is having current liability more then its current assets.
QUICK RATIOS- All current assets are not equally liquid. While cash is readily available for making payments to suppliers & debtors can be quickly converted into cash, inventories are two steps away from conversion into cash (sales & collection).thus a large current ratio by itself is not a satisfactory measure of liquidity of when inventories constitute a major part of current asset. Therefore, the quick ratio or acid test ratio is computed as a supplement to the current ratio. One can see from the records ratio is not showing a satisfactory position at all. It is maximum 0.65 in the year 06 but it is still not good. Decreased liquidity shows the excess of inventory involved in the company.
CASH RATIOS-Cash ratio is in the good position for the first 4 years but then in the year 09 the ratio drops to 0.69 that means the cash is not sufficient to meet out the liabilities.
DEBTORS TURNOVER RATIOS-Debtors turnover ratio is measuring the realization of amount after the credit sales by the company. The calculated ratios shows a high debtor turnover ratio that indicates a good management of receivable. It means the realization is occurring frequently that is why company might not face liquidity problem in the coming time. It increased from 15.9834 in the year 05 from 39.379 in the year 09.
AVERAGE COLLECTION PERIOD- It is common to express debtor turnover in average debt collection period in order to calculate leads or lags in collection relative to the company’s credit period. Average collection period is also decreasing as usual as the debtor turnover is decreasing which suggest that the debtors are taking time to be realized. Year 09 shows the worst case of them.
TOTAL ASSET TURNOVER RATIO-It shows how many times the company generates sale to a rupee investment in current & fixed asset together as we can see that the ratios is 1.46,1.54,1.33,1.21 in the last 4 years. It shows that company is generating satisfactory sales out of its investment.
PROFIT MARGIN- It shows that the company is earning about 16% to 20% profit on for the last 5 years. It can increase it in future by decreasing the operating expenses and increasing the sales of company.
RETURN ON ASSET- The return on asset ratio is indicating that the company is earning how much profit as per rupee 1 of asset investment. In our data ratios keeps on increasing which suggest that profit earned are kept on increasing. It increased from 22.
RETURN ON EQUITY-Normal shareholders is entitled to some profit. It indicates how well the company is using the resources of the owner. As per the given data return on equity was 0.254676 in the year 05 which increased to 0.391941 in the year 07 but again it fell to .246115.
INVENTORY TURNOVER RATIOS-This ratio is too low in the company which suggest that the product is not turning into receivables very quickly so the holding period & the cost of holding the inventory is quit high &kept on increasing. A lower inventory turnover ratio implies poor inventory management.
INTEREST COVERAGE RATIO-It shows the relation between EBIDT & interest that how many times the interest charges are covered by funds. From the data of ACC Cement we can see that it is quit high it was 13.38646 in 05 that reached to50.95395 in the year 08 which implies adequate safety for payment of interest even there were to be a drop in the company’s earning.
DEBT EQUITY RATIO-The debt equity ratio is showing a sound position as this shows that the equity proposition in the company is more than the debt proportion, thus outsiders has got a security as well as company is almost free from the debts. We can see debt equity ratio goes on declining from . 5014 in the year 05 to .094232, thus it is showing that the role of the equity in the structure is maintained day by day.
Analysis of financial ratios of Ultratech Cement Ltd.
Balance Sheet of UltraTech Cement ------------------ in Rs. Cr. -----------------Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
124.40 124.40 0.09 0.00 913.78 0.00 1,038.27 1,221.93 229.90 1,451.83 2,490.10 Mar '06
124.49 124.49 0.00 0.00 1,639.29 0.00 1,763.78 1,151.25 427.38 1,578.63 3,342.41 Mar '07
124.49 124.49 0.77 0.00 2,571.73 0.00 2,696.99 982.66 757.84 1,740.50 4,437.49 Mar '08
124.49 124.49 1.68 0.00 3,475.93 0.00 3,602.10 1,175.80 965.83 2,141.63 5,743.73 Mar '09
124.49 124.49 1.99 0.00 4,482.17 0.00 4,608.65 854.19 750.33 1,604.52 6,213.17 Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets
4,605.38 2,068.21 2,537.17 141.03 172.39 379.57 172.55 61.50 613.62 168.23 0.10 781.95 0.00 1,103.26 39.18 1,142.44 -360.49 0.00 2,490.10
4,784.70 2,267.42 2,517.28 696.95 483.45 433.58 183.50 89.59 706.67 265.46 0.00 972.13 0.00 1,308.93 18.47 1,327.40 -355.27 0.00 3,342.41
4,972.60 2,472.14 2,500.46 2,283.15 170.90 609.76 216.61 100.69 927.06 390.43 0.00 1,317.49 0.00 1,708.96 125.55 1,834.51 -517.02 0.00 4,437.49
7,401.02 2,765.33 4,635.69 677.28 1,034.80 691.97 186.18 104.49 982.64 395.71 0.00 1,378.35 0.00 1,860.59 121.80 1,982.39 -604.04 0.00 5,743.73
8,078.14 3,136.46 4,941.68 259.37 1,669.55 821.70 215.83 83.73 1,121.26 374.92 0.00 1,496.18 0.00 1,992.60 161.01 2,153.61 -657.43 0.00 6,213.17
Contingent Liabilities Book Value (Rs)
685.42 83.46 ------------------ in Rs. Cr. ------------------
1,942.56 141.69
645.17 216.59
355.07 289.22
420.26 370.05
Profit & Loss account of UltraTech Cement
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
3,785.29 485.84 3,299.45 24.59 39.12 3,363.16 772.84 910.11 92.26 48.19 935.24 18.32 0.00 2,776.96 Mar '06
5,484.35 575.30 4,909.05 61.41 -30.76 4,939.70 871.30 1,138.32 117.22 56.22 1,241.44 30.15 0.00 3,454.65 Mar '07
6,286.24 773.81 5,512.43 98.67 23.42 5,634.52 1,032.34 1,253.26 171.55 61.52 1,267.57 35.48 -13.37 3,808.35 Mar '08
7,160.42 774.92 6,385.50 75.35 86.34 6,547.19 1,280.31 1,712.98 216.76 92.58 1,405.51 28.88 -8.38 4,728.64 Mar '09
7,729.13 686.31 7,042.82 122.71 4.59 7,170.12 1,593.03 1,430.91 250.28 97.42 1,653.57 48.58 -4.02 5,069.77 Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
561.61 586.20 96.99 489.21 216.03 0.00 273.18 12.41 285.59 55.83 229.76 2,004.12 0.00 21.79 3.06
1,423.64 1,485.05 92.61 1,392.44 226.25 0.00 1,166.19 0.00 1,166.19 383.91 782.28 2,583.35 0.00 49.79 6.98
1,727.50 1,826.17 81.93 1,744.24 237.23 0.00 1,507.01 0.00 1,507.01 499.40 1,007.61 2,776.01 0.00 62.24 10.58
1,743.20 1,818.55 134.09 1,684.46 323.00 0.00 1,361.46 0.00 1,361.46 384.44 977.02 3,448.33 0.00 62.24 10.58
1,977.64 2,100.35 124.11 1,976.24 388.08 0.00 1,588.16 0.00 1,588.16 494.92 1,093.24 3,476.74 0.00 74.69 12.41
1,243.99 18.47 17.50 83.46
1,244.86 62.84 40.00 141.69
1,244.86 80.94 50.00 216.59
1,244.86 78.48 50.00 289.22
1,244.87 87.82 60.00 370.05
Cash Flow of UltraTech Cement
------------------ in Rs. Cr. -----------------Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
285.59 551.63 -357.24 -191.02 3.37 58.23 61.60 ------------------ in Rs. Cr. ------------------
1166.19 1113.09 -1046.25 -38.84 27.99 61.60 89.59
1507.01 1375.26 -1441.79 77.63 11.10 89.59 100.69
1361.46 1457.57 -1645.43 191.66 3.80 100.69 104.49
1588.16 1571.93 -851.66 -741.03 -20.76 104.49 83.73
Key Financial Ratios of UltraTech Cement
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) operating Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%)
10.00 1.75 45.15 265.23 60.27 -17.02 10.4 14.9 13.41 12.99 6.91 6.49
10.00 4.00 114.36 394.35 116.03 -29 24.1 28.07 20.3 20.23 15.75 15.67
10.00 5.00 138.77 442.82 191.59 -31.33 26.61 27.03 22.02 22.02 17.99 17.99
10.00 5.00 140.03 512.95 267.12 -27.29 21.9 22.24 20.41 20.41 15.06 15.06
10.00 6.00 158.86 565.75 350.75 -28.08 22.24 22.56 20.43 20.43 15.3 15.3
Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Dividend Per Share eps Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Coverage ratio Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times
14.8 22.13 20.79 6.33 14.89
37.54 44.35 44.13 141.69 37.78
35.55 37.37 36.94 216.59 38.25
26.45 27.13 27.8 289.22 27.93
27.22 23.73 23.27 370.05 27.43
0.67 0.34 1.4 1.38 4.11 1.4 6.03 5.6
0.71 0.4 0.9 0.88 14.45 0.9 15.99 11.89
0.58 0.38 0.65 0.53 20.85 0.65 22.15 16.19
0.59 0.34 0.59 0.51 12.75 0.59 13.74 10.7
0.67 0.3 0.35 0.34 14.97 0.35 16.75 12.94
8.75 19.16 21.2 1.25 1.33 0.72 16.25 9.76 -39.33
11.46 27.58 34.61 1.67 1.47 1.03 21.46 8.02 -26.05
31.16 27.55 31.16 1.11 1.24 1.11 23.23 6.82 -33.77
22.89 31.71 22.89 0.86 1.11 0.86 28.87 6.35 -34.05
22.65 35.04 22.65 0.87 1.14 0.87 29.94 7.29 -33.61
23.42 0.24 25.57 15.23
17.74 2.43 23.17 13.71
18.72 1.53 20.73 9.45
20.05 0.72 19.67 9.7
22.61 3.01 20.98 6.83
10.81 5.57 88.49 94.25 3.36
7.25 5.62 92.71 94.35 1.57
7.22 5.84 92.7 94.1 1.41
7.45 5.6 92.73 94.5 1.62
7.96 5.87 91.88 94.04 1.1
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Earnings Per Share Book Value
18.47 83.46
62.84 141.69
80.94 216.59
78.48 289.22
87.82 370.05
Liquidity ratios:
1. Current ratio: No trend can be observed in the current ratios over the past five
years. The current ratio has been quite fluctuating. After an increase in the current ratio from .75 in the financial year ending March 06 to 1.08 in the year mar 07 it again drops to 1.03. Further in the year Mar 09 it again rises to 1.26 before dropping to .89 in the year Mar 10. The component analysis of the above ratio shows that the fluctuating nature of the above ratio is due to the rise and fall of the current assets. However the current liabilities follow an increasing trend over the period. The industry average for the period stands at .8 . Therefore it can be said that Ambuja Cements Ltd is operating well above the industry standards.
2. Quick ratios: The quick ratio follows the same trend as the current ratio i.e. it
is fluctuating and does not follow any trend. The quick ratio increases to .7 in the year ending Mar 07 from .34 in d preceding year and finally drooping to .63 in the year Mar08. It further increases to .74 in the year Mar 09 and then again decreases to .57 in the year in Mar 10. The average quick ratios for the past 5 years stands at .45 . Comparing the quick ratio of company with the industry shows that it has is certainly in a better position and has more liquidity than the industry average.
3. Inventory turnover ratio: The ratio shows how quick the company is able to
convert its inventory to sales. The ratio is well above the industry average in
each of the years. The ratio first increases to 17.19 in the first year i.e in Mar 07 and then drops to 11.13 in the year Mar 08. It further drops to 7.54 in the year Mar 09 and finally increases to 11.36 in the year Mar 10.
Leverage ratios
1. Debt equity ratio: The debt- equity ratio has shown a declining trend over the
past 5 years which shows that the company is reducing its financial risk continuously. This also shows that company is not trying to be very aggressive in its approach by taking large debts. Ambuja Cements Ltd. has D/E ratio of .51 in the year Mar 06 which declines to .24 in the year in the year Mar 07 and further to .07 in the year Mar 08. There is further drop to .05 in the year ending Mar 09 and finally the D/E ratios comes to .02 .
2. Fixed assets turnover ratio: The above ratio shows how much sales a
company is able to generate for every 1 rupee of fixed asset involved in the business. The ratio does not follow any fixed pattern as such. The ratio reaches 1.37 in the year ending Mar 07 from .7 in the previous year before dropping to 1.09 in the year ending Mar 08. It increases marginally in the year Mar 09 to 1.1 and then increases to 1.15 in the year Mar 10.
Profitability ratios
1. Gross profit margin: This ratios shows the amount of profit earned for one rupee of sale. The ratio first follows an increasing trend and then declines. It increases to the 29.47% in the year Mar 07 from 20.59% in Mar 06. It further
increases to 32.03% in the next year. However it has been dropping in the last two years. It declined to 24.65% in the year Mar 09 and further to 22.87% in the year Mar 07.
2. Net profit margin: : This ratios shows the amount of net profit(PAT) earned for one rupee of sale. It follows the same trend as the gross profit margin ratio i.e. the ratio first follows an increasing trend and then declines. It increases to the 23.86% in the year Mar 07 from 17.85% in Mar 06. It further increases to 30.53% in the next year. However it has been dropping in the last two years. It declined to 22.11% in the year Mar 09 and further to 16.78% in the year Mar 07.
3. Return on equity: Return on equity shows the amount of PAT earned for one rupee of equity in the company. The ROE of Ambuja Cements Ltd. has been on the decline for the past three years continuously. An analysis of the above ratios shows the following. The ratio reached its peak in the year Mar 07 i.e. 43.16% from 21.56% in Mar 06. The it declined to 38% in the year Mar 08 and further 24.73% and 18.83 in the succeeding years.
4. Dividend per share: The ratio shows the amount of dividend earned per share an investor holds. The ratio is extremely important from the point of view of the investors. The ratio increases to 3.3 in the year Mar 07 from 1.8 in the year Mar 06. It further increased to 3.5 in the year Mar 08 before finally dropping to 2.2 in the year Mar 09 and finally increases to 2.4 in Mar 10.
Payout ratios
1. Retention ratio: The ratio denotes the percentage of the earnings(PAT) retained by the company for expenditure or building up reserves. The ratio first increases to 70.49% in the year Mar 07 from 64.89% in the year Mar 06 and then dropping to 54.13% in the year Mar 08. The ratio further increases to 70.81% and 71.21% in the following years.
doc_739633918.pdf
This is a report highlights financial analysis of Ultratech , Ambuja, ACC.
FINANCIAL ANALYSIS AND REPORTING ASSIGNMENT
REPORT ON
Fianacial analysis of Cement Industry(Ultratech , Ambuja, ACC)
Submitted to:
Prof. Vanadana Mishra
Submitted by:
ANKUR OBEROI ANKUR SRIVASTAVA ESHA RAIZADA MAYANK TIWARI MONA FEROZ
PRAGATI KATIYAR
AMBUJA CEMENT: Ratio Analysis
Balance Sheet of Ambuja Cements ------------------ in Rs. Cr. ------------------
Jun '05 12 mths
Dec '06 18 mths
Dec '07 12 mths
Dec '08 12 mths
Dec '09 12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
270.38 270.38 0.03 0.00 1,908.01 0.00 2,178.42 549.33 578.12 1,127.45 3,305.87 Jun '05
303.37 303.37 1.14 0.00 3,187.21 0.00 3,491.72 317.77 547.61 865.38 4,357.10 Dec '06
304.48 304.48 0.00 0.00 4,356.77 0.00 4,661.25 100.00 230.42 330.42 4,991.67 Dec '07
304.52 304.52 0.34 0.00 5,368.01 0.00 5,672.87 100.00 188.67 288.67 5,961.54 Dec '08
304.74 304.74 0.24 0.00 6,165.92 0.00 6,470.90 100.00 65.70 165.70 6,636.60 Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses
3,709.17 1,463.93 2,245.24 118.10 1,125.06 317.00 45.84 86.27 449.11 145.10 0.26 594.47 0.00 676.70 106.77 783.47 -189.00 6.47
4,542.50 2,053.32 2,489.18 634.93 1,133.12 408.82 89.95 172.36 671.13 313.03 205.74 1,189.90 0.00 929.06 168.68 1,097.74 92.16 7.71
5,231.05 2,271.19 2,959.86 696.79 1,288.94 581.60 145.68 114.94 842.22 237.04 535.85 1,615.11 0.00 1,081.70 493.55 1,575.25 39.86 6.22
5,706.94 2,514.19 3,192.75 1,947.22 332.39 939.75 224.60 123.73 1,288.08 351.82 728.11 2,368.01 0.00 1,412.55 470.56 1,883.11 484.90 4.28
6,224.13 2,784.09 3,440.04 2,714.43 727.01 683.24 152.20 116.64 952.08 292.65 764.04 2,008.77 0.00 1,582.32 674.04 2,256.36 -247.59 2.71
Total Assets
3,305.87
4,357.10
4,991.67
5,961.54
6,636.60
Contingent Liabilities Book Value (Rs)
332.70 16.11 ------------------ in Rs. Cr. -----------------Jun '05
506.71 23.01
1,193.08 30.62
1,224.42 37.26
647.12 42.47
Profit & Loss account of Ambuja Cements
Dec '06
Dec '07
Dec '08
Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
3,025.84 428.79 2,597.05 70.51 6.97 2,674.53 435.52 678.40 106.44 92.97 502.01 61.77 -3.43 1,873.68 Jun '05
7,022.59 796.31 6,226.28 111.07 -10.92 6,326.43 1,007.07 1,239.87 235.98 185.59 1,273.55 122.96 -10.82 4,054.20 Dec '06
6,469.68 798.29 5,671.39 965.04 58.79 6,695.22 953.32 1,004.20 209.46 124.50 1,254.41 140.63 -9.47 3,677.05 Dec '07
7,089.89 907.80 6,182.09 468.18 62.62 6,712.89 1,251.08 1,325.69 266.94 145.61 1,276.80 215.64 -21.19 4,460.57 Dec '08
7,763.93 680.72 7,083.21 180.41 -49.44 7,214.18 1,642.09 1,422.75 274.29 161.66 1,432.55 202.19 -19.33 5,116.20 Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend
730.34 800.85 91.77 709.08 195.41 0.94 512.73 6.08 518.81 50.52 468.29 1,438.16 0.00 189.16
2,161.16 2,272.23 113.23 2,159.00 326.12 1.07 1,831.81 10.17 1,841.98 338.73 1,503.25 3,047.13 0.00 461.24
2,053.13 3,018.17 75.85 2,942.32 236.34 0.47 2,705.51 -194.92 2,510.59 741.49 1,769.10 2,723.73 0.00 532.65
1,784.14 2,252.32 32.06 2,220.26 259.76 1.72 1,958.78 11.28 1,970.06 567.79 1,402.27 3,209.49 0.00 334.97
1,917.57 2,097.98 22.43 2,075.55 296.99 1.57 1,776.99 26.52 1,803.51 585.14 1,218.37 3,474.11 0.00 365.59
Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
26.54
64.69
90.52
56.92
62.13
13,518.83 3.46 90.00 16.11 ------------------ in Rs. Cr. -----------------Jun '05
15,168.2 9 9.91 165.00 23.01
15,223.7 5 11.62 175.00 30.62
15,225.9 9 9.21 110.00 37.26
15,237.1 1 8.00 120.00 42.47
Cash Flow of Ambuja Cements
Dec '06
Dec '07
Dec '08
Dec '09
12 mths
18 mths
12 mths
12 mths
12 mths
Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
518.54 548.15 -253.14 -277.31 17.70 68.83 86.53 ------------------ in Rs. Cr. ------------------
1841.60 1796.18 -627.17 -888.86 280.15 97.95 378.10
2712.35 1558.67 -161.59 -1124.44 272.63 378.16 650.79
1969.84 966.22 -274.90 -482.06 209.26 642.58 851.84
1803.30 2129.15 -1196.13 -466.66 466.36 949.11 1415.47
Key Financial Ratios of Ambuja Cements
Jun '05
Dec '06
Dec '07
Dec '08
Dec '09
Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs)
2.00 1.80 5.40 19.21 12.08
2.00 3.30 14.25 41.05 19.66
2.00 3.50 13.49 37.25 27.48
2.00 2.20 11.72 40.60 34.13
2.00 2.40 12.58 46.49 39.35
Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition
71.98 28.12 20.39 25.44 25.29 23.41 17.85 15.93 16.94 21.50 19.24 11.45 11.45 16.94
64.15 34.71 29.13 33.74 29.04 28.29 23.86 23.09 43.76 43.05 41.77 27.56 27.56 43.77
63.92 36.20 31.35 36.26 34.61 23.44 30.53 19.35 38.84 37.95 24.09 30.58 30.58 38.84
63.91 28.85 24.04 24.65 21.17 21.17 22.11 22.11 28.19 24.73 19.07 37.23 37.23 28.19
63.86 27.07 22.32 22.87 20.46 20.46 16.78 16.78 27.04 18.83 18.35 42.45 42.45 27.04
0.76 0.35 0.52 0.52 6.28 0.52 8.24 8.24
1.08 0.70 0.25 0.25 17.61 0.25 19.73 17.17
1.03 0.64 0.07 0.07 26.02 0.07 28.68 27.45
1.26 0.74 0.05 0.05 52.66 0.05 60.58 52.89
0.89 0.57 0.03 0.03 80.15 0.03 93.32 68.63
8.28 58.66 9.55 1.07 0.79 0.70 30.85 7.58 -26.20
15.41 91.70 17.19 2.28 1.43 1.37 43.45 6.26 7.99
9.96 48.14 11.13 1.68 1.14 1.09 30.93 7.00 2.53
7.54 33.39 7.54 1.10 1.05 1.10 36.96 8.01 28.24
11.36 37.60 11.36 1.15 1.08 1.15 14.69 4.58 -12.58
16.76 -17.91
16.17 5.05 19.08
16.80 11.01 20.95
20.23 8.41 19.2
23.18 31.66 18.58
Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times
10.48
8.36
4.9
3.69
2.6
46.06 32.45 48.4 64.89 1.84
34.98 28.73 63.85 70.49 0.49
35.22 31.06 44.44 54.13 0.24
27.94 23.55 63.75 70.81 0.22
35.1 28.19 63.97 71.21 0.11
Jun '05
Dec '06
Dec '07
Dec '08
Dec '09
Earnings Per Share(%) Book Value
3.46 16.11
9.91 23.01
11.62 30.62
9.21 37.26
8 42.47
LIQUIDITY RATIOS
Liquidity is defined as having enough cash (or near-cash assets) to pay your bills when they come due. The liquidity ratios compare the assets that will be converted into cash soon (the numerator) to the bills that will be coming due soon (the denominator). CURRENNT RATIO: The current ratio is a popular financial ratio used to test a company's liquidity (also referred to as its current or working capital position) by deriving the proportion of current assets available to cover current liabilities. The concept behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes). In theory, the higher the current ratio, the better.
Current Ratio = Current Assets Current Liabilitie s
In the above graph we can see that current ratio increased from 0.75 to 1.08 in the year 2006. Further it declined by .05% to 1.03% in year 2007. In year 2008 it increased by . 23% to 1.26. Finally it declined to .89% in the year 2009. Generally it tells for every 1 rupee that company owes how much amount is available to repay its debts. Here in years where ratio was above 1%, in those years current ratio was favorable, telling that current assets are more than current liabilities. But in year 2009 we can see that current ratio is just .89% which tells that current liabilities of company are greater than current assets which is not favorable for the company.
QUICK RATIO: The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The quick ratio is more conservative than the current ratio because it excludes inventory and other current assets, which are more difficult to turn into cash. Therefore, a higher ratio means a more liquid current position. The average for all manufacturing companies is about one (1.0). This average also varies a great deal from one industry to another.
Quick Ratio = Cash + Mkt. Securities + Acc. Receivable Current Liabilitie s
A commonly used variation of the ratio is:
Quick Rati o = Current As sets - Inv entory Current Li abilities
Here we can see that quick ratio of the company is fluctuating. It increased in year 2006 to .7 as compared to .34 in year 2005. Further it declined in year 2007 to .63 and then again it increased to .74 in the year 2008. Finally it declined again in year 2009 by . 17(.74-.57) and reached .57. Here we can see in the year 2009 current ratio is significantly higher, than quick ration, it is a clear indication that the company's current assets are dependent on inventory. Quick ratio indicates the companies’ ability to meet its short term obligations. Since currently the ratio is .57 which is less than 1 so it is not favorable for the company at present.
Working Capital: It is a financial metric which represents operating liquidity available to an organization. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. Net working capital is working capital minus cash (which is a current asset) and minus interest bearing liabilities (i.e. short term debt).
Working Capital = Current Assets ? Current Liabilities
A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash
In the above graph we can see that, there was working capital deficiency in year 2005 i.e. -189. Working capital increased to 92.16 in year 2006. It remained positive in year 2007 but it declined to 39.86 crores. There was drastic increase in working capital due to increase in amount of current assets, as result it increased to 484.9 crores in year 2008. But in year 2009 the amount of current liabilities was greater than current assets which resulted in working capital deficiency i.e. it declined to -247.59. Negative working capital is not favorable for the company as it can’t fulfill its short term obligations and upcoming operational expenses. Thus company has to relook its management of inventories, accounts receivable and payable and cash in order to insure positive working capital.
LEVERAGE RATIOS
Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods 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. It is used to measure a company's mix of operating costs, giving an idea of how changes in output will affect operating income. Fixed and variable costs are the two types of operating costs; depending on the company and the industry, the mix will differ.
Interest coverage ratio: A ratio used to determine how easily a company can pay
interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period.
The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses.
From the above graph we can see that company’s interest coverage ratio is constantly increasing. Initially it was 6.28 in year 2005 but it increased to 17.61 in year in 2006.
Further it kept on increasing and finally reached 80.15 in year 2009. It shows company is generating sufficient revenues to satisfy interest expenses.
Debt-equity ratio: The debt-equity ratio is another leverage ratio that compares a
company's total liabilities to its total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. To a large degree, the debt-equity ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. A lower the percentage of debt-equity ratio means that a company is using less leverage and has a stronger equity position.
D ebt - to - Equity Ratio = Total Debt (or Liabilitie s) Total Equity
Here in the above case we can see that debt-equity ration is constantly declining since year 2005. In year 2005 D/E ratio was .52 but it declined to .25 i.e. almost by half to .25 in year 2006. It further declined to .07 in year 2007 and finally declined more and
reached .03 in year 2009. A lower the percentage of debt-equity ratio means that a company is using less leverage and has a stronger equity position.
TURNOVER OR EFFICIENCY RATIOS
Turnover ratios measure the management’s efficiency and effectiveness in managing the firm’s assets. In general, sales (or a measure of sales, like cost of goods sold) will be in the numerator. We would like for the value of the turnover ratios to be quite high (with the exception of the average collection period). Inventory Turnover: Indicates the number of times a year that the firm’s inventory has been replaced. A low ratio may indicate that the firm has some obsolete inventory, or that possibly, the firm is simply overstocked on inventory. If the inventory turnover is 4 times per year, the company is replacing its inventory approximately every 3 months; if its inventory turnover is 12 times per year, it is replacing its inventory approximately every 30 days (or 1 month).
Sales Inventory
Inventory Turnover =
From the above graph we can see that, in 2005 the inventory turnover ratio was 8.28.It further increase by 7.13 in 2006 and reached to 15.41. But in year 2007 the inventory turn over ratio declined by 5.45 and was 9.96. When we talk about year 2008 there was again a decline by 2.42 and in 2009 the ratio was 11.36 thereby increasing by 3.82. Thus we
can say that the inventory turnover of the company is fluctuating. Inventory turnover ratio of 11.36 in year 2009 tells us that company is replacing its inventory approximately every 30 days (or 1 month). Total Asset Turnover Ratio: The purpose of investing in assets is to generate sales: the higher the sales per dollar invested in total assets, the better. This ratio measures how efficiently the management is achieving its goal.
Sales Total Assets
Total Asset Turnover =
Major fault of the ratio: Total assets are made up of current assets and fixed assets. If the company’s fixed assets are old (and therefore almost fully depreciated), the value of net fixed assets on the balance sheet will be quite small. This, in turn, will make total assets appear to be small and the value of the ratio will be high. This implies that a company with old assets is managing its assets quite efficiently. In fact, the company may not be managing its assets well at all – they are simply old and much depreciated. A company that has recently upgraded its assets by investing in newer equipment may actually be better managed, but its total asset turnover ratio will look inferior to the company with older assets. In spite of this, the total asset turnover ratio is widely used; it’s simply important to know of its major deficiency when using it.
In 2005 the ratio was 0.79 and there was an increase of 0.64 in 2006 as it was 1.43 but in 2007 the Total Assets Turnover Ratio decreased to 1.14, it further decrease by 0.09 in 2008 as it was 1.05 and in 2009 there was a slight increase of 0.03.Therefore we can say that the Total Assets Turnover Ratio of the company is fluctuating. FIXED ASSETS TURNOVER RATIO: IT is the ratio of sales (on the Profit and loss account) to the value of fixed assets (on the balance sheet). It indicates how well the business is using its fixed assets to generate sales. FIXED ASSET TURNOVER RATIO = Net Sales Total Fixed Assets The higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed assets for each dollar of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets.
The Fixed Assets Turnover Ratio in 2005 was 1.07. In 2006 it increased to 2.28, increasing by 1.21.In 2007 it declined to 1.68. Further it declined to 1.1 in year 2008. In 2009 there was a slight increase by 0.05 and it reached to 1.15. Greater the ratio more it is beneficial for the company. Ratio of 1.15 in year 2009 tells that 1.15 times assets were
turned and converted into sales. The ratio was most favorable in year 2006 as its fixed asset turnover was 2.28, which was highest in last 5 years. Debtors Turnover Ratio: It indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.
Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors
The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.
In 2005 the Debtors Turnover Ratio was 58.66.In 2006 there was increase by 33.04 and reached to 91.70.In 2007 it declined by 43.56 and ratio was 48.14. In 2008 it further decrease to 33.39. finally in year 2009 there was slight increase and it reached 37.6. ratio was highest in 2006, it tells that in year 2006 there was most efficient management of
debtors or debtors were most liquid. Lower ratio in year 2008 i.e. 33.39 indicates inefficient management of debtors or less liquid debtors. PROFITABILITY RATIOS A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. These ratios, much like the operational performance ratios, give users a good understanding of how well the company utilized its resources in generating profit and shareholder value. The long-term profitability of a company is vital for both the survivability of the company as well as the benefit received by shareholders. It is these ratios that can give insight into the all important "profit". Return on Assets: The primary purpose of investing in assets is to generate sales, which in turn lead to profits. The return on assets ratio measures the profitability per dollar of investment in the firm. Notice that the ratio doesn’t say anything about how the assets are financed, i.e., where the money comes from (either debt or equity). It simply wants to know how profitable the company is per dollar invested in total assets (no matter where the money comes from to finance those assets).
Earnings After Taxes Total Assets
Return on Assets =
Here we can see that ratio is continuously in creasing over the past 5 years. Initially ratio was 11.45 in year 2005 but it kept on increasing per year and finally reached 42.45 in year 2009. It is good sign for the company. Net Profit Margin: Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.
The profit margin is mostly used for internal comparison. It is difficult to accurately compare the net profit ratio for different entities. Individual businesses' operating and financing arrangements vary so much that different entities are bound to have different levels of expenditure, so that comparison of one with another can have little meaning. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase profits and result in a net loss. Profit margin is an indicator of a company's pricing policies and its ability to control costs. Differences in competitive strategy and product mix cause the profit margin to vary among different companies
Here we can see that net profit margin increased from 16.78 in year 2005 to 22.22 in year 2006. It further increased to 30.53 in year 2007. But after that it kept on declining continuously for both years i.e. the ratio declined from 30.53 to 23.86 in year 2008 and it further declined to 17.85 in year 2009. Return on Equity – This ratio indicates how profitable a company is by comparing its net income to its average shareholders' equity. The return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors.
Widely used by investors, the ROE ratio is an important measure of a company's earnings performance. The ROE tells common shareholders how effectively their money is being employed. Peer Company, industry and overall market comparisons are appropriate; however, it should be recognized that there are variations in ROEs among some types of businesses. In general, financial analysts consider return on equity ratios in the 15-20% range as representing attractive levels of investment quality. While highly regarded as a profitability indicator, the ROE metric does have a recognized weakness. Investors need to be aware that a disproportionate amount of debt in a company's capital structure would translate into a smaller equity base. Thus, a small amount of net income (the numerator) could still produce a high ROE off a modest equity base (the denominator).
We can see that ROE is continuously decreasing since year 2007. In year 2007 it was 24.09, it further declined to 19.07 and then it further declined in year 2009 and reached 18.35. Here we can say that earning of shareholders of the company is continuously decreasing which is not a good sing for the company. Return on Investment: A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. The return on investment formula:
Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.
From the above graph we can see that ROI was 16.94 in year 2005. It increased drastically to 43.77 in year 2006. But after that it kept on declining for all the 3 years. It declined to 38.84 in year 2007. Further it declined more in year 2008 and reached 28.19. finally it declined more and reached 27.04 in year 2009.
ACC RATIOS ANALYSIS
Balance Sheet of ACC
------------------ in Rs. Cr. -----------------Dec '05
Dec '06
Dec '07
Dec '08
Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital
184.72
187.48
187.83
187.88
187.94
Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
184.72 0.82 0.00 1,951.21 0.00 2,136.75 950.12 121.30 1,071.42 3,208.17 Dec '05
187.48 0.28 0.00 2,955.16 0.00 3,142.92 720.96 50.20 771.16 3,914.08 Dec '06
187.83 0.10 0.00 3,964.78 0.00 4,152.71 266.03 40.38 306.41 4,459.12 Dec '07
187.88 0.00 0.00 4,739.85 0.00 4,927.73 450.00 32.03 482.03 5,409.76 Dec '08
187.94 0.08 0.00 5,828.20 0.00 6,016.22 550.00 16.92 566.92 6,583.14 Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets
4,628.64 1,722.29 2,906.35 290.95 333.80 600.95 199.17 100.60 900.72 533.54 2.19 1,436.45 0.00 1,449.02 316.77 1,765.79 -329.34 6.41 3,208.17
4,816.25 1,893.76 2,922.49 558.42 543.09 624.13 213.96 152.98 991.07 569.21 467.19 2,027.47 0.00 1,596.50 541.83 2,138.33 -110.86 0.94 3,914.08
5,464.07 2,149.35 3,314.72 649.19 844.81 730.86 289.29 78.87 1,099.02 544.31 664.61 2,307.94 0.00 1,991.27 666.27 2,657.54 -349.60 0.00 4,459.12
5,835.67 2,365.97 3,469.70 1,602.86 679.08 793.27 310.17 87.57 1,191.01 779.76 896.67 2,867.44 0.00 2,245.39 963.93 3,209.32 -341.88 0.00 5,409.76
6,826.27 2,667.98 4,158.29 2,156.21 1,475.64 778.98 203.70 95.64 1,078.32 714.55 650.74 2,443.61 0.00 2,558.73 1,091.88 3,650.61 -1,207.00 0.00 6,583.14
Contingent Liabilities Book Value (Rs)
282.42 115.76
341.56 167.81
890.62 221.33
1,734.21 262.56
840.52 320.45
Profit & Loss account of ACC
------------------ in Rs. Cr. ------------------
Dec '05
Dec '06
Dec '07
Dec '08
Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
3,723.51 539.71 3,183.80 300.84 45.26 3,529.90 1,078.84 299.52 184.84 157.65 838.12 84.88 0.00 2,643.85 Dec '05
6,467.84 736.09 5,731.75 247.87 -29.25 5,950.37 1,513.55 430.98 318.02 262.45 1,298.32 189.08 0.00 4,012.40 Dec '06
7,865.11 970.32 6,894.79 369.35 6.93 7,271.07 1,843.65 517.56 352.73 344.17 1,547.30 354.51 0.00 4,959.92 Dec '07
8,300.18 1,070.21 7,229.97 252.84 0.33 7,483.14 1,180.48 1,598.96 413.04 362.90 1,620.65 270.99 0.00 5,447.02 Dec '08
8,803.17 781.58 8,021.59 137.40 28.74 8,187.73 1,233.42 1,539.65 367.71 421.69 1,658.79 262.72 0.00 5,483.98 Dec '09
9 mths
12 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
585.21 886.05 66.19 819.86 164.64 6.46 648.76 46.93 695.69 140.17 544.18 1,565.01 0.00 147.61 20.70 1,845.08 29.49 80.00 115.76
1,690.10 1,937.97 75.19 1,862.78 254.61 6.24 1,601.93 14.55 1,616.48 369.10 1,231.84 2,498.85 0.00 280.92 39.40 1,872.78 65.78 150.00 167.81
1,941.80 2,311.15 73.87 2,237.28 305.43 1.55 1,930.30 -0.16 1,930.14 491.70 1,438.59 3,116.27 0.00 375.02 63.74 1,876.24 76.67 200.00 221.33
1,783.28 2,036.12 39.96 1,996.16 294.18 0.00 1,701.98 35.39 1,737.37 524.60 1,212.79 4,266.54 0.00 375.33 63.79 1,876.82 64.62 200.00 262.56
2,566.35 2,703.75 84.30 2,619.45 342.09 0.00 2,277.36 21.54 2,298.90 688.93 1,606.73 4,250.56 0.00 431.76 73.38 1,877.40 85.58 230.00 320.45
CURRENT RATIO 0.81348858 QUICK RATIO 0.473159322 CASH RATIO 0.870460247 1.019698 0.898128 0.920759 0.695569 0.656278 0.593436 0.646296 0.455987 0.948156 0.86845 0.893473 0.66937
DEBT EQUITY RATIO 0.501425061
0.245364
0.073786
0.09782
0.094232
INTEREST COVERAGE RATIO 13.38646321
25.77431
31.28672
50.95395
32.07295
INVENTORY TURNOVER RATIO 2.387916 DIH 150.7591 151.4806 255.4198 224.758 2.376543 1.409444 1.601723
TOTAL ASSETS TURNOVER RATIO 0.992403769 PROFIT MARGIN RATIO 0.17092154 DEBTORS TURNOVER RATIO 15.98533916 RETURN ON ASSETS(%) 16.96231808 RETURN ON EQUITY 0.254676495 AVERAGE COLLECTION PERIOD 1413.558014
1.464393
1.546222
1.336468
1.218505
0.214915 26.78889 31.47202
0.208649 23.83349 32.26175
0.167745 23.3097 22.41855
0.200301 39.37943 24.40674
0.391941
0.346422
0.246115
0.267066
918.505
1039.195
1462.729
1347.98
CURRENT RATIOS-Current ratios of ACC cement for the year 06 has increased from 05 because of the increase in the cash balance and inventory and less increase in current liability, but in the year 07 it decreased as current liabilities are still increasing but comparatively assets are not increasing that much but again in the year in 08 the current ratio increased to 0.893 &then in 09 it decreased to 0.66.in all the 5 years the comfort level of 1:1 thus it shows the company is having current liability more then its current assets.
QUICK RATIOS- All current assets are not equally liquid. While cash is readily available for making payments to suppliers & debtors can be quickly converted into cash, inventories are two steps away from conversion into cash (sales & collection).thus a large current ratio by itself is not a satisfactory measure of liquidity of when inventories constitute a major part of current asset. Therefore, the quick ratio or acid test ratio is computed as a supplement to the current ratio. One can see from the records ratio is not showing a satisfactory position at all. It is maximum 0.65 in the year 06 but it is still not good. Decreased liquidity shows the excess of inventory involved in the company.
CASH RATIOS-Cash ratio is in the good position for the first 4 years but then in the year 09 the ratio drops to 0.69 that means the cash is not sufficient to meet out the liabilities.
DEBTORS TURNOVER RATIOS-Debtors turnover ratio is measuring the realization of amount after the credit sales by the company. The calculated ratios shows a high debtor turnover ratio that indicates a good management of receivable. It means the realization is occurring frequently that is why company might not face liquidity problem in the coming time. It increased from 15.9834 in the year 05 from 39.379 in the year 09.
AVERAGE COLLECTION PERIOD- It is common to express debtor turnover in average debt collection period in order to calculate leads or lags in collection relative to the company’s credit period. Average collection period is also decreasing as usual as the debtor turnover is decreasing which suggest that the debtors are taking time to be realized. Year 09 shows the worst case of them.
TOTAL ASSET TURNOVER RATIO-It shows how many times the company generates sale to a rupee investment in current & fixed asset together as we can see that the ratios is 1.46,1.54,1.33,1.21 in the last 4 years. It shows that company is generating satisfactory sales out of its investment.
PROFIT MARGIN- It shows that the company is earning about 16% to 20% profit on for the last 5 years. It can increase it in future by decreasing the operating expenses and increasing the sales of company.
RETURN ON ASSET- The return on asset ratio is indicating that the company is earning how much profit as per rupee 1 of asset investment. In our data ratios keeps on increasing which suggest that profit earned are kept on increasing. It increased from 22.
RETURN ON EQUITY-Normal shareholders is entitled to some profit. It indicates how well the company is using the resources of the owner. As per the given data return on equity was 0.254676 in the year 05 which increased to 0.391941 in the year 07 but again it fell to .246115.
INVENTORY TURNOVER RATIOS-This ratio is too low in the company which suggest that the product is not turning into receivables very quickly so the holding period & the cost of holding the inventory is quit high &kept on increasing. A lower inventory turnover ratio implies poor inventory management.
INTEREST COVERAGE RATIO-It shows the relation between EBIDT & interest that how many times the interest charges are covered by funds. From the data of ACC Cement we can see that it is quit high it was 13.38646 in 05 that reached to50.95395 in the year 08 which implies adequate safety for payment of interest even there were to be a drop in the company’s earning.
DEBT EQUITY RATIO-The debt equity ratio is showing a sound position as this shows that the equity proposition in the company is more than the debt proportion, thus outsiders has got a security as well as company is almost free from the debts. We can see debt equity ratio goes on declining from . 5014 in the year 05 to .094232, thus it is showing that the role of the equity in the structure is maintained day by day.
Analysis of financial ratios of Ultratech Cement Ltd.
Balance Sheet of UltraTech Cement ------------------ in Rs. Cr. -----------------Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
124.40 124.40 0.09 0.00 913.78 0.00 1,038.27 1,221.93 229.90 1,451.83 2,490.10 Mar '06
124.49 124.49 0.00 0.00 1,639.29 0.00 1,763.78 1,151.25 427.38 1,578.63 3,342.41 Mar '07
124.49 124.49 0.77 0.00 2,571.73 0.00 2,696.99 982.66 757.84 1,740.50 4,437.49 Mar '08
124.49 124.49 1.68 0.00 3,475.93 0.00 3,602.10 1,175.80 965.83 2,141.63 5,743.73 Mar '09
124.49 124.49 1.99 0.00 4,482.17 0.00 4,608.65 854.19 750.33 1,604.52 6,213.17 Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets
4,605.38 2,068.21 2,537.17 141.03 172.39 379.57 172.55 61.50 613.62 168.23 0.10 781.95 0.00 1,103.26 39.18 1,142.44 -360.49 0.00 2,490.10
4,784.70 2,267.42 2,517.28 696.95 483.45 433.58 183.50 89.59 706.67 265.46 0.00 972.13 0.00 1,308.93 18.47 1,327.40 -355.27 0.00 3,342.41
4,972.60 2,472.14 2,500.46 2,283.15 170.90 609.76 216.61 100.69 927.06 390.43 0.00 1,317.49 0.00 1,708.96 125.55 1,834.51 -517.02 0.00 4,437.49
7,401.02 2,765.33 4,635.69 677.28 1,034.80 691.97 186.18 104.49 982.64 395.71 0.00 1,378.35 0.00 1,860.59 121.80 1,982.39 -604.04 0.00 5,743.73
8,078.14 3,136.46 4,941.68 259.37 1,669.55 821.70 215.83 83.73 1,121.26 374.92 0.00 1,496.18 0.00 1,992.60 161.01 2,153.61 -657.43 0.00 6,213.17
Contingent Liabilities Book Value (Rs)
685.42 83.46 ------------------ in Rs. Cr. ------------------
1,942.56 141.69
645.17 216.59
355.07 289.22
420.26 370.05
Profit & Loss account of UltraTech Cement
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
3,785.29 485.84 3,299.45 24.59 39.12 3,363.16 772.84 910.11 92.26 48.19 935.24 18.32 0.00 2,776.96 Mar '06
5,484.35 575.30 4,909.05 61.41 -30.76 4,939.70 871.30 1,138.32 117.22 56.22 1,241.44 30.15 0.00 3,454.65 Mar '07
6,286.24 773.81 5,512.43 98.67 23.42 5,634.52 1,032.34 1,253.26 171.55 61.52 1,267.57 35.48 -13.37 3,808.35 Mar '08
7,160.42 774.92 6,385.50 75.35 86.34 6,547.19 1,280.31 1,712.98 216.76 92.58 1,405.51 28.88 -8.38 4,728.64 Mar '09
7,729.13 686.31 7,042.82 122.71 4.59 7,170.12 1,593.03 1,430.91 250.28 97.42 1,653.57 48.58 -4.02 5,069.77 Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
561.61 586.20 96.99 489.21 216.03 0.00 273.18 12.41 285.59 55.83 229.76 2,004.12 0.00 21.79 3.06
1,423.64 1,485.05 92.61 1,392.44 226.25 0.00 1,166.19 0.00 1,166.19 383.91 782.28 2,583.35 0.00 49.79 6.98
1,727.50 1,826.17 81.93 1,744.24 237.23 0.00 1,507.01 0.00 1,507.01 499.40 1,007.61 2,776.01 0.00 62.24 10.58
1,743.20 1,818.55 134.09 1,684.46 323.00 0.00 1,361.46 0.00 1,361.46 384.44 977.02 3,448.33 0.00 62.24 10.58
1,977.64 2,100.35 124.11 1,976.24 388.08 0.00 1,588.16 0.00 1,588.16 494.92 1,093.24 3,476.74 0.00 74.69 12.41
1,243.99 18.47 17.50 83.46
1,244.86 62.84 40.00 141.69
1,244.86 80.94 50.00 216.59
1,244.86 78.48 50.00 289.22
1,244.87 87.82 60.00 370.05
Cash Flow of UltraTech Cement
------------------ in Rs. Cr. -----------------Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
12 mths
12 mths
12 mths
12 mths
12 mths
Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
285.59 551.63 -357.24 -191.02 3.37 58.23 61.60 ------------------ in Rs. Cr. ------------------
1166.19 1113.09 -1046.25 -38.84 27.99 61.60 89.59
1507.01 1375.26 -1441.79 77.63 11.10 89.59 100.69
1361.46 1457.57 -1645.43 191.66 3.80 100.69 104.49
1588.16 1571.93 -851.66 -741.03 -20.76 104.49 83.73
Key Financial Ratios of UltraTech Cement
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) operating Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%)
10.00 1.75 45.15 265.23 60.27 -17.02 10.4 14.9 13.41 12.99 6.91 6.49
10.00 4.00 114.36 394.35 116.03 -29 24.1 28.07 20.3 20.23 15.75 15.67
10.00 5.00 138.77 442.82 191.59 -31.33 26.61 27.03 22.02 22.02 17.99 17.99
10.00 5.00 140.03 512.95 267.12 -27.29 21.9 22.24 20.41 20.41 15.06 15.06
10.00 6.00 158.86 565.75 350.75 -28.08 22.24 22.56 20.43 20.43 15.3 15.3
Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Dividend Per Share eps Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Coverage ratio Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times
14.8 22.13 20.79 6.33 14.89
37.54 44.35 44.13 141.69 37.78
35.55 37.37 36.94 216.59 38.25
26.45 27.13 27.8 289.22 27.93
27.22 23.73 23.27 370.05 27.43
0.67 0.34 1.4 1.38 4.11 1.4 6.03 5.6
0.71 0.4 0.9 0.88 14.45 0.9 15.99 11.89
0.58 0.38 0.65 0.53 20.85 0.65 22.15 16.19
0.59 0.34 0.59 0.51 12.75 0.59 13.74 10.7
0.67 0.3 0.35 0.34 14.97 0.35 16.75 12.94
8.75 19.16 21.2 1.25 1.33 0.72 16.25 9.76 -39.33
11.46 27.58 34.61 1.67 1.47 1.03 21.46 8.02 -26.05
31.16 27.55 31.16 1.11 1.24 1.11 23.23 6.82 -33.77
22.89 31.71 22.89 0.86 1.11 0.86 28.87 6.35 -34.05
22.65 35.04 22.65 0.87 1.14 0.87 29.94 7.29 -33.61
23.42 0.24 25.57 15.23
17.74 2.43 23.17 13.71
18.72 1.53 20.73 9.45
20.05 0.72 19.67 9.7
22.61 3.01 20.98 6.83
10.81 5.57 88.49 94.25 3.36
7.25 5.62 92.71 94.35 1.57
7.22 5.84 92.7 94.1 1.41
7.45 5.6 92.73 94.5 1.62
7.96 5.87 91.88 94.04 1.1
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Earnings Per Share Book Value
18.47 83.46
62.84 141.69
80.94 216.59
78.48 289.22
87.82 370.05
Liquidity ratios:
1. Current ratio: No trend can be observed in the current ratios over the past five
years. The current ratio has been quite fluctuating. After an increase in the current ratio from .75 in the financial year ending March 06 to 1.08 in the year mar 07 it again drops to 1.03. Further in the year Mar 09 it again rises to 1.26 before dropping to .89 in the year Mar 10. The component analysis of the above ratio shows that the fluctuating nature of the above ratio is due to the rise and fall of the current assets. However the current liabilities follow an increasing trend over the period. The industry average for the period stands at .8 . Therefore it can be said that Ambuja Cements Ltd is operating well above the industry standards.
2. Quick ratios: The quick ratio follows the same trend as the current ratio i.e. it
is fluctuating and does not follow any trend. The quick ratio increases to .7 in the year ending Mar 07 from .34 in d preceding year and finally drooping to .63 in the year Mar08. It further increases to .74 in the year Mar 09 and then again decreases to .57 in the year in Mar 10. The average quick ratios for the past 5 years stands at .45 . Comparing the quick ratio of company with the industry shows that it has is certainly in a better position and has more liquidity than the industry average.
3. Inventory turnover ratio: The ratio shows how quick the company is able to
convert its inventory to sales. The ratio is well above the industry average in
each of the years. The ratio first increases to 17.19 in the first year i.e in Mar 07 and then drops to 11.13 in the year Mar 08. It further drops to 7.54 in the year Mar 09 and finally increases to 11.36 in the year Mar 10.
Leverage ratios
1. Debt equity ratio: The debt- equity ratio has shown a declining trend over the
past 5 years which shows that the company is reducing its financial risk continuously. This also shows that company is not trying to be very aggressive in its approach by taking large debts. Ambuja Cements Ltd. has D/E ratio of .51 in the year Mar 06 which declines to .24 in the year in the year Mar 07 and further to .07 in the year Mar 08. There is further drop to .05 in the year ending Mar 09 and finally the D/E ratios comes to .02 .
2. Fixed assets turnover ratio: The above ratio shows how much sales a
company is able to generate for every 1 rupee of fixed asset involved in the business. The ratio does not follow any fixed pattern as such. The ratio reaches 1.37 in the year ending Mar 07 from .7 in the previous year before dropping to 1.09 in the year ending Mar 08. It increases marginally in the year Mar 09 to 1.1 and then increases to 1.15 in the year Mar 10.
Profitability ratios
1. Gross profit margin: This ratios shows the amount of profit earned for one rupee of sale. The ratio first follows an increasing trend and then declines. It increases to the 29.47% in the year Mar 07 from 20.59% in Mar 06. It further
increases to 32.03% in the next year. However it has been dropping in the last two years. It declined to 24.65% in the year Mar 09 and further to 22.87% in the year Mar 07.
2. Net profit margin: : This ratios shows the amount of net profit(PAT) earned for one rupee of sale. It follows the same trend as the gross profit margin ratio i.e. the ratio first follows an increasing trend and then declines. It increases to the 23.86% in the year Mar 07 from 17.85% in Mar 06. It further increases to 30.53% in the next year. However it has been dropping in the last two years. It declined to 22.11% in the year Mar 09 and further to 16.78% in the year Mar 07.
3. Return on equity: Return on equity shows the amount of PAT earned for one rupee of equity in the company. The ROE of Ambuja Cements Ltd. has been on the decline for the past three years continuously. An analysis of the above ratios shows the following. The ratio reached its peak in the year Mar 07 i.e. 43.16% from 21.56% in Mar 06. The it declined to 38% in the year Mar 08 and further 24.73% and 18.83 in the succeeding years.
4. Dividend per share: The ratio shows the amount of dividend earned per share an investor holds. The ratio is extremely important from the point of view of the investors. The ratio increases to 3.3 in the year Mar 07 from 1.8 in the year Mar 06. It further increased to 3.5 in the year Mar 08 before finally dropping to 2.2 in the year Mar 09 and finally increases to 2.4 in Mar 10.
Payout ratios
1. Retention ratio: The ratio denotes the percentage of the earnings(PAT) retained by the company for expenditure or building up reserves. The ratio first increases to 70.49% in the year Mar 07 from 64.89% in the year Mar 06 and then dropping to 54.13% in the year Mar 08. The ratio further increases to 70.81% and 71.21% in the following years.
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