A

SYNOPSIS REPORT
ON
PROFITABILITY ANALYSIS
AT
ULTRATECH CEMENTS LTD
Submitted
By
BURRA CHANDANA
H.T.NO: 1302-20-672-100
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
RAMANTHAPUR
(Affiliated to Osmania University)
2020-2022

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 Aurora’s PG College (MBA), Ramanthapur
Department of Management

SYNOPSIS

Title of the Project : PROFITABILITY ANALYSIS

Student Name : BURRA CHANDANA

Hall Ticket Number : 1302-20-672-100

Signature of the Student :

Signature of the Guide :

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 INDEX

S. No. CONTENTS Page No

1 INTRODUCTION

2 NEED FOR THE STUDY

3 OBJECTIVES OF THE STUDY

4 SCOPE OF THE STUDY

5 RESEARCH METHODOLOGY

6 REVIEW OF LITERATURE

7 PROPOSED OUTCOMES

8 LIMITATIONS OF THE STUDY

9 CHAPTERISATION

BIBLIOGRAPHY

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 ABSTRACT

profitability analysis show a company's overall efficiency and performance. We can divide
profitability ratios into two types: margins and returns. Ratios that show margins represent the
firm's ability to translate sales dollars into profits at various stages of measurement. Ratios
that show returns represent the firm's ability to measure the overall efficiency of the firm in
generating returns for its shareholders. Every firm is most concerned with its profitability.
One of the most frequently used tools of financial ratio analysis is profitability ratios which
are used to determine the company's bottom line and its return to its investors. Profitability
measures are important to company managers and owners alike. If a small business has
outside investors who have put their own money into the company, the primary owner
certainly has to show profitability to those equity investors.

Traditionally, farm profits have been computed by using “accounting profits”. To understand
accounting profits, think of your income tax return. Your Schedule F provides a listing of your
taxable income and deductible expenses. These are the same items used in calculating
accounting profits. However, your tax statement may not give you an accurate picture of
profitability due to IRS rapid depreciation and other factors. To compute an accurate picture
of profitability you may want to use a more accurate measure of depreciation. Accounting
profits provide you with an intermediate view of the viability of your business. Although one
year of losses may not permanently harm your business, consecutive years of losses (or net
income insufficient to cover living expenditures) may jeopardize the viability of your
business.

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 INTRODUCTION

Every firm is most concerned with its profitability. One of the most frequently used tools of
financial ratio analysis is profitability ratios which are used to determine the company's
bottom line and its return to its investors. Profitability measures are important to company
managers and owners alike. If a small business has outside investors who have put their own
money into the company, the primary owner certainly has to show profitability to those
equity investors.

Profitability ratios show a company's overall efficiency and performance. We can divide
profitability ratios into two types: margins and returns. Ratios that show margins represent
the firm's ability to translate sales dollars into profits at various stages of measurement. Ratios
that show returns represent the firm's ability to measure the overall efficiency of the firm in
generating returns for its shareholders.

Profitability ratios measure a company’s ability to generate earnings relative to sales, assets
and equity. These ratios assess the ability of a company to generate earnings, profits and cash
flows relative to some metric, often the amount of money invested.
They highlight how effectively the profitability of a company is being managed.

Common examples of profitability ratios include return on sales, return on investment, return
on equity, return on capital employed (ROCE), cash return om capital invested (CROCI),
gross profit margin and net profit margin. All of these ratios indicate how well a company is
performing at generating profits or revenues relative to a certain metric.

Different profitability ratios provide different useful insights into the financial health and
performance of a company. For example, gross profit and net profit ratios tell how well the
company is managing its expenses. Return on capital employed (ROCE) tells how well a
company is using capital employed to generate returns. Return on investment tells whether the
company is ignoring enough profits for its shareholders.

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For most of these ratio, a higher value is desirable. A higher value means that the company is
doing well and it is good at generating profits, revenues and cash flows. Profitability ratios are
of little value in isolaton. They give meaningful information only when they are analyzed in
comparison to competitors or compared to the ratios in previous periods. Therefore, trend
analysis and industry analysis is required to draw meaningful conclusions about the
profitability of a company.

Some background knowledge of the nature of business of a company is necessary when

analyzing profitability ratios. For example sales of some businesses are seasonal and they
experience seasonality in their operations. The retail industry is example of such businesses.
The revenues of retail industry are usually very high in the fourth quarter due to Christmas.
Therefore, it will not be useful to compare the profitability ratios of this quarter with the
profitability ratios of earlier quarter should be compared to the profitability ratios of similar
quarter in the previous years.

Financial statements are prepared primarily for decision-making. They play a prominent role
in setting the framework of managerial decisions. But the information provided in the
financial statements is not an end in itself as no meaningful conclusions can be drawn from
these statements alone. However, the information

provided in financial statements is of immense use in making decisions through analysis and
interpretation of financial statements.

Profitability is the primary goal of all business ventures. Without profitability the business
will not survive in the long run. So measuring current and past profitability and projecting
future profitability is very important.

Profitability is measured with income and expenses. Income is money generated from the
activities of the business. For example, if crops and livestock are produced and sold, income is
generated. However, money coming into the business from activities like borrowing money
do not create income. This is simply a cash transaction between the business and the lender to
generate cash for operating the business or buying assets.

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 Expenses are the cost of resources used up or consumed by the activities of the business. For
example, seed corn is an expense of a farm business because it is used up in the production
process. Resources such as a machine whose useful life is more than one year is used up over
a period of years. Repayment of a loan is not an expense, it is merely a cash transfer between
the business and the lender.

Profitability is measured with an “income statement”. This is essentially a listing of income

and expenses during a period of time (usually a year) for the entire business. Decision Tool
Income Statement - Short Form, is used to do a simple income statement analysis. An Income
Statement is traditionally used to measure profitability of the business for the past accounting
period. However, a “pro forma income statement” measures projected profitability of the
business for the upcoming

accounting period. A budget may be used when you want to project profitability for a
particular project or a portion of a business.

NEED FOR THE STUDY:

 The problems, which are common to most of the public sectors under taking, are materials
scarcity.
 Thus the importance of the study reveals as to how efficiently the working capital has been
used so far in the organization.
 Profitability Analysis is one of the key areas of financial decision-making. It is significant
because, the management must see that an excessive investment in current assets should
protect the company from the problems of stock-out. Current assets will also determine the
liquidity position of the firm.
 The goal of Profitability Analysis is to manage the firm current assets and current liabilities in
such a way that a satisfactory level of working capital is maintained. If the firm cannot
maintain a satisfactory level of capital, it is likely to become insolvent and may be even forced
into bankruptcy.

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 SCOPE OF THE STUDY:

 The scope of the study is limited to collecting financial data published in the annual reports of
the company every year.
 The analysis is done to suggest the possible solutions.

 The study is carried out for 5 years (2017-2021).

 A study of the Profitability Analysis involves an examination of long term as well as short term
sources that a company taps in order to meet its requirements of finance.
 The scope of the study is confined to the sources that Ultratech cement limited tapped over the
years under study i.e. 2017-2021.

OBJECTIVES OF THE STUDY:

 To study the Profitability Analysis of the Ultratech cement limited for the period of study of 5
years.
 To analyses interpret and to suggest the Profitability efficiency of the Ultratech cement limited
by comparing the balance sheet of past 5 years.
 To analyze the financial performance of the Ultratech cement limited.With the help of ratios.
 To study the capital employed by the Ultratech cement limited.
 To study the financial performance of the company with reference to Profitability.

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 RESEARCH METHODOLOGY:
This report is based on secondary data, however secondary data collection was given more importance
since it is overhearing factor in attitude studies. One of the most important users of research
methodology is that it helps in identifying the problem, collecting, analyzing the required information
data and providing an alternative solution to the problem. It also helps in collecting the vital
information that is required by the top management to assist them for the better decision making both
day to day decision and critical ones.

Data sources

The study is based on secondary data.

Secondary method:

The secondary data collection method includes:

 The lecturers delivered by the superintendents of respective departments.

 The brochures and material provided by securities limited.

 The data collected from the magazines of the NSE, economic times,etc.

 Various books relating to the investments, capital market and other related topics .
 Secondary data collected from annual reports and also existing manuals and like company
records balance sheet and necessary records.

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ARTICLES

ARTICLE :1

TITLE : Customer Profitability Analysis

AUTHOR: Francies J Mulhern

SOURCE: Measurement Concentration &Reasearch Direction

YEAR: 2020

As marketing activities become more precisely targeted to consumers through direct and
interactive forms of communication, Customer profitability takes on a central role in the
development of market starategics. This paper provides a conceptual and methodological
foundation for measuring customer profitability by generalizing approaches to measuring
customer lifetime value in direct marketing for broader target marketing applications.
Particular emphasis is placed on the preceise specification of the inputs into a profitability
analysis and the measures of the degree of conceration of profits among customers. An
empirical analysis involving the profitability of customers in a business-to-business
marketing context is described, along with reaserch propostions for future work on the
determinents of customers profitability.

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ARTICLE :2

TITLE : Measurement of business profitability

stratergy AUTHOR: N.Venkatranam & vasudevan

Ramanujam SOURCE: A comparison of

profitability Analysis YEAR: 2020

A two-dimensional classificatory scheme highlighting ten different approaches to the
measurement of business performance in strategy research is developed. The
first dimension concerns the use of financial versus broader operational criteria,
while the second focuses on two alternate data sources. The scheme permits the
classification of an exhaustive coverage of measurement approaches and is
useful for discussing their relative merits and demerits. Implications for
operationalizing business performance in future strategy research are discussed.

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ARTICLE :3

TITLE : Production and profitability analysis

AUTHOR: Enrico Cagno

SOURCE: Industrial pollution&prevention

YEAR: 2019

The essential characteristicsof the P2 approach is the ‘reduction at spource’

principle ,derived from the idea that the generation of pollutants can be reduced
or eliminated by increasing efficiency in the use of raw materials, energy,water
and the other resources.from this point of view,it is also a means of raising
operational efficiency and profitability. The numerous success cases as well the
less satisfactory results documented in the scientific and technical literature
provided the starting point for a detailed analysis of how and to what extent
industrial P2 projects have been developed and realized, particulary in terms of
profitability.

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ARTICLE :4

TITLE: Efficiently Inefficient Markets for Assets and Profitability analysis

AUTHOR: Nicolae Gârleanu, & LasseHeje Pedersen

JOURNAL: The Journal of Finance

YEAR: 2019

It consider a model where investors can invest directly or search for an

Profitability analysis, information about assets is costly, and manager’s charge an
endogenous fee. The efficiency of asset prices is linked to the efficiency of the
Profitability analysis: if investors can find managers more easily, more money is
allocated to active management, fees are lower, and asset prices are more
efficient. Informed managers outperform after fees, uninformed managers
underperform, while the average manager's performance depends on the number
of “noise allocators.” Small investors should remain uninformed, but large and
sophisticated investors benefit from searching for informed active managers
since their search cost is low relative to capital. Hence, managers with larger and
more sophisticated investors are expected to outperformer.

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ARTICLE :5

TITLE: A Study of basic difference between the historical cost of that asset
and it associated depreciation.

AUTHOR: BLOEM & GORTER

JOURNAL: A journal on the causes of making of poor Profitability analysis

cited by 4 related articles.

YEAR: 2019

Net book value of an asset is basically the difference between the historical cost
of that asset and it associated depreciation. From the foregoing, it is apparent
that in order to report a true and fair position of the financial jurisprudence of an
entity it is relatable to record and report the value of Hedging on derivative sat
its net book value. Apart from the fact that it is enshrined in Standard
Accounting Statement (SAS) 3 and IAS 19 that value of asset should be carried
at the net book value, it is the best way of consciously presenting the value of
assets to the owners of the business and potential investor.

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 LIMITATIONS OF THE STUDY :

1. The analyst or the user must have comprehensive knowledge and experience
about the concern whose statements have been used for calculating these ratios
only the dependable conclusions may drawn thus ratios are signified tools only
in the hands of experts in the hands of quacks for whom they may prove
dangerous tools.
2. Ratios are not an end in themselves but they are a means to achieve a particular end.
Hence it totally depends upon user or analyst as what conclusions is drawn on
the basis of ratios calculated.
3. A single ratio in itself is not imported or as limited value because trends are more
significant in the analysis.
4. Another limitation is that of standard ratio with which the actual ratios may be
compared generally there is no such ratio, which may be treated as standard for
the purpose of comparison because conditions of one concern differ
significantly from those of another concern.
5. The accuracy and correctness of ratios are totally dependent upon the reliability
of the data contained in financial statements on the basis of which ratios are
calculated.

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 PROPOSED OUT COMES

Whether you are recording profitability for the past period or projecting profitability for the

coming period, measuring profitability is the most important measure of the success of the

business. A business that is not profitable cannot survive. Conversely, a business that is highly

profitable has the ability to reward its owners with a large return on their investment.

Increasing profitability is one of the most important tasks of the business managers. Managers

constantly look for ways to change the business to improve profitability. These potential

changes can be analyzed with a pro forma income statement or a Partial Budget. Partial

budgeting allows you to assess the impact on profitability of a small or incremental change in

the business before it is implemented.

A variety of Profitability Ratios (Decision Tool) can be used to assess the financial health of a

business. These ratios, created from the income statement, can be compared with industry

benchmarks. Also, Income Statement Trends (Decision Tool) can be tracked over a period of

years to identify emerging problems.

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 CHAPTERISATION

CHAPTER -1 - INTRODUCTION

CHAPTER - 2 REVIEW OF LITERATURE

CHAPTER - 3 - INDUSTRY PROFILE & COMPANY PROFILE

CHAPTER - 4 - DATA ANALYSIS AND INTERPRETATION

CHAPTER - 5 – SUMMARY AND CONCLUSION

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 BIBLIOGRAPHY
BOOKS REFFERED
 Customer Profitability Analysis Written By Francies J Mulhern.

 Measurement of business profitability stratergy Written By N.Venkatranam

 & vasudevan Ramanujam.

 Production and profitability analysis Written By Enrico Cagno.

 Efficiently Inefficient Markets for Assets and Profitability analysis Written

By Nicolae Gârleanu, & LasseHeje Pedersen.
 A Study of basic difference between the historical cost of that asset and it
associated
 Depreciation Written By BLOEM & GORTER.

 Profitability analysis Within Commercial Banking Groups International Evidence

 Written By Pedro piers, Pedro Matos, Miguel A. Ferreira.

 A Study on Profitability analysis Written By Dr. S. Nagaraju

 Profitability analysis, Verification & Audit Written By Rosalina

 Best Practices for Fixed Profitability analysis Written By Nur Hadisukmana

 fixed Profitability analysiswith respect to wilomather and platt pumps pvt ltd
Written By Dr. Daniel Penkar
 Financial Management Written By M.Y. Khan & P.K. Jain.

 Financial Management Written By Prasanna Chandra.

 Financial Management Written By I. M. Pandey.

 Alic C.Lee, John C. Lee, “Financial An Analysis, Planning and Forecasting”,

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 2009, 2nd Edition Cambridge.
 Dr. Jawaharlal, “Accounting For Management”, 2009, 5th Edition Himalya
Publishing House.

NEWSPAPERS

 Times of India –times group

 The economic times

 The Hindhu

JOURNALS

 ENRICO-Journal of financial Economics,2090-Elesvier

 R.UMA RANI D.NITHYA-Journal of Financial Management,2003-Wiley

 E Walster, E Berscheld, GW Walster-Journal of portfolios Mangement

 Francies J Mulhern- Measurement Conceration &Reasearch Direction

 N.Venkatranam & vasudevan Ramanujam- A comparison of profitability

Analysis
 Pedro piers, Pedro Matos, Miguel A. Ferreira- The Journal of Finance

 Dr. S. Nagaraju- Journal for advanced research in applied sciences

 Emmanuel Ikechukwu Okoye- National journal of banking and finance

 Nur Hadisukmana- Journal for advance research in applied sciences

 Dr.Daniel Penkar- Guidance note on treatment of expenditure

during construction period
 VivekSharma, &Prerna Sharma- International Journal of Management Prudence

 Alexandra v. Lubyanaya- International Journal of Environmental and Science

Education

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WEBSITES

https://www.ultratechcement.com https://www.damordaram.com

https://nseindia.com

http://www.investopedia.com/terms/w/workingcapitalmanagement.asp

http://www.studyfinance.com/lessons/workcap/

http://www.efinancemanagement.com/working-capital-finacing/importance-

ofworking-capital-management

http://www.businessdictionary.com/definition/working-capital-management.html

http://www.accountingtools.com/working-capital-management-def

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