A STUDY ON FINANCIAL PERFORMANCE

ANALYSIS OF RAMCO CEMENT LIMITED

Submitted in partial fulfillment of the requirement for the reward of

BACHELOR OF COMMERCE

By

SURIYA HARISH A

39740236

BACHELOR OF COMMERCE SCHOOL OF

MANAGEMENT STUDIES

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY

(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC I 12B Status by UGC I Approved by
AICTE Jeppiaar Nagar, RAJIV GANDHI SALAI, CHENNAI – 600119
MAY 2022

I
 SCHOOL OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This is to certify that this Project Report is the bonafide work of SURIYA HARISH A
(39740236) who has done the Project work entitled A STUDY ON FINANCIAL
PERFORMANCE ANALYSIS OF RAMCO CEMENT LTD under my supervision from
December 2021 to February 2022.

Dr. R. THAMILSELVAN
Internal Guide External Guide

Dr. BHUVANESWARI G.
Dean, School of Management Studies

Submitted for Viva voice Examination held on

Internal Examiner External Examiner

II
 DECLARATION

I SURIYA HARISH A (39740236). Hereby declare that the Project Report entitled
“ A STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF RAMCO CEMENT
LTD done by me under the guidance of Dr. THAMILSELVAN .R, M.Com, M.B.A,
MPhil, B.Ed., Ph.D., Associate Professor, Department of Management Studies is
submitted in partial fulfillment of the requirements for the award of Bachelor of
Commerce degree.

DATE:

PLACE : CHENNAI SURIYA HARISH. A

III
 ACKNOWLEDGEMENT

I am pleased to acknowledge my sincere thanks to Board of Management of

SATHYABAMA for their kind encouragement in doing this project and for
completing it successfully. I am grateful to them.

I convey my thanks to Dr. G. Bhuvaneswari, MBA., Ph.D., Dean - School

of Management Studies and Dr. A. Palani, M.Com., M.Phil., M.B.A.,
Ph.D., Head , School of Management Studies for providing me necessary
support and details at the right time during the progressive reviews.

I would like to express my sincere and deep sense of gratitude to my project

training GUIDE DR THAMILSELVAN.R, M. COM, MBA, M.Phil B.Ed.,
Ph.D., for his valuable guidance, suggestions and constant encouragement
paved way for the successful completion of my project work.

I wish to express my thanks to all Teaching and Non-teaching staff members

of the Department of Bachelore of commerce who were helpful in many
ways for the completion of the training.

SURIYA HARISH A

IV
 ABSTRACT

In this project we are looking at the Financial Performance Analysis in

a core sector industry. Balance sheet review of the last five years along with
the changes in the component wise analysis of Current Asset and Current
Liabilities to identify the causes of changes, with trend analysis and
comparative Balance sheet for a term of five years covering a case study of a
company to establish” The story of revival of a sick company”. In the words of
Myers, “Financial Performance Analysis is largely a study of relationship
among the various financial factors in a business as disclosed by a single set
of statements and a study of the trends of these factors as shown in a series
of statements.” The purpose of financial analysis is to diagnose the information
content in financial statements so as to judge the profitability and financial
soundness of the firm. In this project we will perform the financial analysis of
Limited we will go through the financial statements of the company to diagnose
financial soundness.

V
CHAPTER TITLE PAGE NO.
NO.

DECLARATION i.
ii.
LIST OF TABLES
iii.
LIST OF FIGURES
1. INTRODUCTION
1
1.1 Need for the Study
1.2 Objectives of the Study 2
1.3 Scope of the Study 2
1.4 Limitation of the Study 3
1.5 Company Profile 3
REVIEW OF LITERATURE
2. 6
2.1 Review of literature
2.2 Theoretical Review 11
RESEARCH METHODOLOGY
16
3. 3.1 Research methodology
3.2 data collection 16

3.3 statistical Tools 16

DATA ANALYSIS & INTERPRETATION
4 4.1 Ratio analysis 17

5 FINDINGS, SUGGESTIONS AND

CONCLUSION
37
5.1 Findings
5.2 suggestions 38
5.3 conclusion 39
REFERANCE 40

APPENDIX 41
comparative balance sheet
42

46
Statement of profit and loss account

VI
 TABLE OF CONTENTS

CHAPTER TITILE PAGE NO

4.1 RATIO ANALYSIS

4.1.1 Gross Profit ratio 17

4.1.2 Absolute liquidity ratio 19

4.1.3 working capital ratio 21

4.1.4 Debt Equity Ratio 23

4.1.5 Debt to total asset ratio ratio 25

4.1.6 Fixed Asset Ratio 27

4
4.1.7 gross profit ratio 29

4.1.8 Net profit ratio 31

4.1.9 Operating ratio 33

4.1.10 Debtors Turnover ratio 35

VII
 CHAPTER I
INTRODUCTION

Financial Performance in broader sense refers to the degree to which financial objectives
being or has been accomplished and is an important aspect of finance risk management.
It is the process of measuring the results of a firm’s policies and operations in monetary
terms. It is used to measure firm’s overall financial health over a given period of time and
can also be used to compare similar firms across the same industry or to compare
industries or sectors in aggregation.

Financial statements are primarily prepared for decision-making. They play a dominant
role in setting the framework of managerial decision. The published financial statements
of business may be of considerable interest to present the same to their respective
potential shareholders, managers, moneylenders, banks, financial institutions, trade
organization and many others.

1.1 NEED FOR THE STUDY

 To understand the meaning, significance and limitation of

financial statement analysis.
 To calculate liquidity, solvency, profitability and activity ratios of
the organization.
 To make a comparative study and give solutions for the
organisational improvement.

1
 1.2 OBJECTIVES OF THE STUDY:
 The study has been undertaken with a broad objective of evaluating
performance of RAMCO CEMENTS LIMITED. The following are the
specific objective of the study.
 To trace out of the history and profile of the company.
 To analyze the overall performance of the RAMCO Cements in respect
ofliquidity efficiency and effectiveness in financial management.
 To find out the various financial ratios related to RAMCO

1.3 SCOPE OF THE STUDY

 . The study entitled “A study on the financial performance of RAMCO CEMENTS

PVT LTD” is to analyze the financial performance of RAMCO CEMENTS PVT LTD
for the last 5 years.

 The study is based on the financial position of the firm by using Ratio analysis,
Trend analysis and Comparative statements. Financial statements help the
management to analyze profit, solvency, liquidity and efficiency etc. this analysis
will give the exact picture of the company. These studies will also help the
management to take managerial decisions. These studies help the management
to understand the new possibilities.

2
 1.4 LIMITATION OF THE STUDY

The limitations of the study are as follows

1. The study is covered only to the past financial performance of company

under taken for the study.
2. Some of the data has not given by the company due to maintenance of
financial secrecy.
3. The period of the study is restricted to last 5 years
4. So the study cannot be covered to all the areas. The financial data cannot
be estimated accurately for the future period due to the financial crisis.

we made use of the trading center throughout most of the term. Students
calculate and interpret financial data, build spreadsheet models, and make general
conclusions about the financial health of a company and its intrinsic value.

1.5 COMPANY PROFIL

Birth Of The Ramco Cements Limited :

In the 1950s, investment in Cement Industry was not attractive due to price
controls and the massive investments required. Only those entrepreneurs who were not
profit-minded but cared for the country's development came forward to invest in the
Cement Industry.

3
 When Shri. Manubai Shah, Central Minister for Industries in late fifties came to
Madras to meet the Industrialists, he called upon Shri P A C Ramasamy Raja and
requested him to start a cement factory in TN. This was readily accepted by Shri PACR
and this marked the birth of The Ramco Cements Limited in 1961.

Concern for Investors:

On the night of September 3, 1962, while the whole city slept, PAC Ramasamy
Raja lay on his bed in the Madras General Hospital, seriously ill. As all his near and dear
watched with tears in their eyes, PAC Ramasamy Raja summoned his son
Ramasubrahmaneya Rajha to his bedside. "There is no more hope", he whispered, "You
should take care of everything from now. My main concern is for The Ramco Cements
Limited. I have taken a lot of money as shares from well-wishers and I have not paid them
back any dividends as yet. This has to be taken care of immediately". Those were his last
words.

PACR's Dream Come True:

PACR's last wish was dutifully fulfilled by the former Chairman
Shri.P.R.Ramasubrahmaneya Rajah. Today, The Ramco Cements Limited is not only
one of the most respected cement companies in the country but also leads in giving the
best return to the investors. With a cement capacity of 15.5 millions tons per annum, the
company is the fifth largest producer of cement in India. It is also one of the largest wind
energy producers in the country with a capacity of 125.95 MW.

Birth of Cement Plants:

The first plant of RCL at Ramasamy Raja Nagar, near Virudhunagar in Tamil Nadu,
commenced its production in 1962 with a capacity of 200 tonnes, using wet process. In
70s, the plant switched over to more efficient dry process. A second kiln was also added
to bring the total capacity to 15 lakh tons per annum.

The second venture of RCL is its Jayanthipuram plant near Vijayawada in A.P.,
set up in 1987. The 36.50 lakh ton per annum plant employs the latest state-of-the-art

4
technology. The third venture of RCL is at Alathiyur in TN. It was set up in 1997 and
expanded by addition of another line in 2001. The 30.50 lakh tons per annum plant is the
most modern plant in the country.

Ariyalur plant started operations in 2009 with a capacity of 2 MTPA. It is well-

equipped with modern quality control systems.Currently Line 2 of the plant with a capacity
of another 2 MTPA was commissioned in 2012. Other Ventures: In 2000, RCL acquired
Gokul Cements situated in Mathod in Karnataka whose capacity is 2.90 lakh tons per
annum. Being an eco-friendly company, RCL set up the Ramco Windfarm in 1993 at
Muppandal in TN. This was followed by wind farms in Poolavadi near Coimbatore in 1995,
Oothumalai in 2005 and in Mathod - the combined capacity of the wind farms is about
125.95 MW. In the year 1999, RCL commissioned the most sophisticated Ready Mix
Concrete Plant in Medavakkam in South Chennai. In 2002, a state-of-art Dry Mortar plant
was commissioned near Sriperumpudur, Tamilnadu which manufactures dry mortar,
cement based putty and tile fix compound. The Company has four satellite grinding units,
located at Chengalpattu and Salem in Tamil Nadu, Kolaghat in West Bengal and Vizag in
Andhra Pradesh. The aggregate grinding capacity of the four plants is 40 lac tonnes per
annum.

5
 CHAPTER 2

2.1 REVIEW OF LITERATURE

1. Abbie Smith Earnings and management incentives says in Journal of

Accounting and Economics Volume 16, Issues 1–3, January–July 1993, Pages 337-
347 This comment evaluates the three papers and suggests avenues for future
research into the stewardship role of accounting data and opportunistic financial
reporting behaviour.

2. Daniel Quan.C , Sheridan Titman Commercial Real Estate Prices and

Stock Market Returns: An International Analysis Pages 21-34 | Published online: 02
Jan 2019 This study examines the relation between stock returns and changes in
property values and rents based on data from 17 countries. Although we find no
relation between real estate values and rents and stock returns in the United States,
we find significant relations in a number of other countries. When the data are pooled,
the relation between stock returns and both value changes and changes in rental
rates is very strong.

3. David Denis J, Diane Denis K Managerial discretion, organizational

structure, and corporate performance Journal of Accounting and Economics Volume
16, Issues 1– 3, January–July 1993, Pages 209-236 . this Study examine the impact
of highly leveraged transactions on managerial discretion over investment policy
using a sample of 39 proposed leveraged recapitalizations. We find significant
decreases in undistributed cash flow, capital expenditures, and total assets following
completed recapitalizations.

4. George Baker P Growth, corporate policies, and the investment

opportunity set Journal of Accounting and Economics Volume 16, Issues 1–3,
January–July 1993, Pages 161-165 . The paper is somewhat weekend by the failure

6
to distinguish between equity value growth and asset growth, and by a sample
segmentation technique that separates firms into growth and nongrowth subsamples,
and finds that the growth firms are larger and substantially more profitable.

5. Greg Clinch Joseph Magliolo CEO compensation and components of

earnings in bank holding companies Journal of Accounting and Economics Volume
16, Issues 1– , January–July 1993, Pages 241-272 . This study analyses the relation
between cash compensation of bank CEOs and accounting earnings from selected
discretionary transactions. Results indicate that income from discretionary
transactions accompanied by cash flow effects is reflected in the CEO compensation
function.

6. Ivan Bull Financial performance of leveraged buyouts: An empirical analysis

Journal of Business Venturing Volume 4, Issue 4, July 1989, Pages 263-279 . This
study compares management performance before and after leveraged buyouts of 25
sample companies. Average performance for the two years before a leveraged
buyout is compared to average performance for the two years after a buyout.

7. James Brikley A Stock-based incentive compensation and investment

behaviour Journal of Accounting and Economics Volume 16, Issues 1–3, January–
July 1993, Pages 349-372 This paper examines how excessive concern over current
stock price can motivate managers to use observable investment decisions to
manipulate the market's inferences about the firm. The result can be overinvestment
or underinvestment.

8. Jennifer Gaver J, Kenneth Gaver Additional evidence on the

association between the investment opportunity set and corporate financing,
dividend, and compensation policies. Journal of Accounting and Economics Volume
16, Issues 1–3, January–July 1993, Pages 125-160 This paper presents additional
evidence on the relation between the investment opportunity set and financing,

7
dividend, and compensation policies. Our results are based on a sample of 237
growth firms and 237 nongrowth firms.

9. Jothi, K. & Kalaivani, P. (2015) studied the comparative performance

of Honda Motors and Toyota Motor that both companies have satisfactory short-term
liquidity position. As for as cash ratio concerned Honda company has upper hand
upper hand in sound cash management practice during the study period.

10. Kevin Murphy.J , Jerold Zimmerman Financial performance surrounding

CEO turnover Journal of Accounting and Economics Volume 16, Issues 1–3,
January–July 1993, Pages 273-315. It concludes that turnover-related changes in
R&D, advertising, capital expenditures, and accounting accruals are due mostly to
poor performance. To the extent that outgoing or incoming managers exercise
discretion over these variables, the discretion appears to be limited to firms where
the CEO's departure is preceded by poor performance.

11. Karen Hopper wrick Stock-based incentives and investment decisions

Journal of Accounting and Economics Volume 16, Issues 1–3, January–July 1993,
Pages 373380 A model is developed where suboptimal investment results from
compensation plans overemphasizing current stock return.

12 .Kaur Harpreet (2016) the author tries to examine the qualities & quantities
performer of Maruti Suzuki co. & how had both impact on its market share in India,
for this study secondary data has been collected from annual reports, journals, report
automobile sites. Result shows that MSL has been successfully leading automobile
sector in India for last few years.

13 .Kumar Mohan M.S, Vasu. V. and Narayana T. (2016) the study has
been made through using different ratios, mean, standard deviation and Altman’s Z
score approach to study the financial health of the company. The study reveals there

8
is a positive correlation between liquidity and profitability ratios except return on total
assets as well as Z score value indicate good health of the company.

14 .KumarNeeraj&KaurKuldip (2016) made an attempt to test the size and

profitability relationship in the Indian automobile industry. To analyze therelationship
linear regressionmodelaswellascross-sectionalhasbeenemployedfortheyear1998 to
2014. The time series analysis showed the positive relationship between firm size
and profitability but cross-sectional show no relationship between firm size and
profitability. .

16.Larry Y Highly leveraged transactions and managerial discretion over

investment policy Journal of Accounting and EconomicsVolume 16, Issues 1–3,
January–July 1993, Pages 237-245 The evidence indicates that highly levered
companies that remain publicly-owned experience improvements in operating
performance and reductions in capital expenditures following the leverage boost
comparable to those of companies that have gone private.

17. Martin Fridson , Martin S. Fridson Financial Warnings Pages 90-91

| Published online: 02 Jan 2019 . This book provides an encyclopedic checklist for
the early detection of negative earnings surprises, including quantitative and time-
tested qualitative danger signals.

18. Maheshwari. S N FINANCIAL MANAGEMENT principles and practice

pages B.25 – B.130 Ninth edition 2004, This is comprehensive test book shows ratio
analysis, categories of ratios.

19. Nicholas Barberis, Richard Thaler Chapter 18 A survey of behavioral

finance Handbook of the Economics of Finance Volume 1, Part B, 2003, Pages 1053-
1128 The field has two building blocks: limits to arbitrage, which argues that it can be

9
difficult for rational traders to undo the dislocations caused by less rational traders;
and psychology, which catalogues the kinds of deviations from full rationality we
might expect to see.

20. Oliver Kim: Yoon Suh Incentive efficiency of compensation based on

accounting and market performance Journal of Accounting and Economics Volume
16, Issues 1– 3, January–July 1993, Pages 25-53 .
21. Richard Lamber A The use of accounting and security price measures of
performance in managerial compensation contracts Journal of Accounting and
Economics Volume 16, Issues 1–3, January–July 1993, Pages 101-123 . The first
two papers analyze the role that earnings can play in removing the ‘noise’ in stock
price in a rational expectations pricing model. The Sloan paper analytically and
empirically examines the role that earnings can play in removing macroeconomic
factors from stock price.

22. Richard Sloan G Accounting earnings and top executive compensation

Journal of Accounting and Economics Volume 16, Issues 1–3, January–July 1993,
Pages 55-100 This paper investigates the role of accounting earnings in top
executive compensation contracts. It provides evidence in support of the hypothesis

23. Robert Whaley.E Chapter 19 Derivatives Handbook of the Economics of

Finance Volume 1, Part B, 2003, Pages 1129-120 . This chapter reviews the
evolution of derivatives contract markets and derivatives research over the past thirty
years. The chapter has six complementary sections.

24. Stephen Brown .J The Efficient Market Hypothesis, the Financial

Analysts Journal, and the Professional Status of Investment Management Journal of
Accounting and Economics Pages 5-14 | Published online: 01 Apr 2020 . The
practical implication of the efficient market hypothesis (EMH)

10
2.1 THEORETICAL REVIEW

RATIO ANALYSIS

A ratio is a mathematical relationship between two items expressed in a quantitative

form. Ratio can be defined as Relationship expressed kin quantitative terms between
figures which have cause and effect relationship which are connected with each other
in some manner or the other. Ratio analysis involves the process of computing
determining and presenting the relationship of items or groups of items of financial
statements.

2.1.1 CURRENT RATIO

The ratio of current assets to current liabilities is called current ratio. In order to
measure the short-term liquidity or solvency of a concern, comparison of current
assets and current liabilities is inevitable. Current ratio indicates the ability of a
concern to meet its current obligations as and when they are due for payment.

Current ratio = Current assets / Current liabilities

2.1.2ABSOLUTE LIQUIDITY RATIO

This ratio also known as absolute liquidity ratio or super quick ratio. Its calculated
when liquidity is highly restricted in terms of cash and cash equivalents.

Cash position ratio= cash and company balances + marketable securities/ current
liabilities.

11
2.1.3 WORKING CAPITAL RATIO

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

Working capital ratio = Net sales / Working Capital

2.1.4 DEBT EQUITY RATIO

The debt-equity ratio is a measure of the relative contribution of the creditors and
shareholders or owners in the capital employed in business. Simply stated, ratio of the
total long term debt and equity capital in the business is called the debt-equity ratio.

Debt equity ratio = long term debt /shareholders fund

2.1.5 DEBT TO TOTAL CAPITAL RATIO

The debt-to-capital ratio is a measurement of a company’s financial leverage. The

debt-to-capital ratio is calculated by taking the company’s interest-bearing debt, both
short- and long-term liabilities and dividing it by the total capital. Total capital is all
interest-bearing debt plus shareholders’ equity, which may include items such as
common stock, preferred stock, and minority interest.

Debt to total capital ratio = debt / share holder fund + debt

2.1.6 DEBT TO TOTAL ASSET RATIO

Total-debt-to-total-assets is a measure of the company’s assets that are financed by

debt rather than equity. When calculated over a number of years, this leverage ratio
shows how a company has grown and acquired its assets as a function of time.
Investors use the ratio to evaluate whether the company has enough funds to meet
its current debt obligations and to assess whether the company can pay a return on
its investment.

12
Debt to total asset ratio = total debt / total asset

2.1.7 PROPRIETARY RATIO

This ratio is also termed as capital ratio or net worth to total asset ratio. This is one of
the variant of debt equity ratio. This shows the relationship between shareholders
funds and total assets

Proprietary ratio = Net worth / Total Assets

2.1.8 DEBTORS TURNOVER RATIO

It represents how quickly the debtors are converted into cash. This ratio is used to
measure the firms liquidity position. This ratio establishes the relationship between
receivables and credit sales. Debtors turnover ratio = Net sales / Average debtors.

2.1.9 FIXED ASSET RATIO

Fixed Assets ratio is a type of solvency ratio long-term solvency which is found by
dividing total fixed assets (net) of a company with its long-term funds. It shows the
amount of fixed assets being financed by each unit of long-term funds.

It helps to determine the capacity of a company to discharge its obligations towards

long-term lenders indicating its financial strength and ensuring its long-term survival.

Fixed asset ratio = fixed asset / long term fund

13
TREND PERCENTAGE ANALYSIS

The next important tools of analysis are trend percentage which plays significant role
in analyzing the financial stature of the enterprise through base years performance
ratio computation. This not only reveals the trend movement of the financial
performance of the enterprise but also highlights the strengths and weaknesses of the
enterprise

The following ratio is being used to compute the trend percentage.

Current year

= -------------- X 100

Base year

This trend ratio is being computed for every component for many numbers of years
which not only facilitates comparison but also guides the firm to understand the trend
path of the firm.

COMPARETIVE BALANCE SHEET

The comparative balance sheet analysis is the study of the trend of the same
items, group of items and computed items in two or more balance sheet of the same
business enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The changes can be observed by comparison of the
conduct of a business the changes can be observed by comparison of the balance
sheet at the beginning at the end of period and these changes can help in forming an
opinion about the progress of an enterprise.

14
Procedure of Comparative Balance Sheet:

 The Comparative balance sheet has two columns for the data of original
balance sheet.
 Third column is used to show increases in figures.
 The Fourth column is use to give percentages of increase or decrease.
 Uses of comparative balance sheet:
 Comparative statement helps to comparing the figures with those of the
previous years event, it is possible to determine where expenses increased or
decreased
 Comparative balance sheet helps to how to plan the following years event.

COMMON SIZE BALANCE SHEET:

A balance sheet in which the items are expressed as percentages of total assets
or total liabilities. A common-size statement is most useful when one attempts to
compare a company to similar companies of different size or when one is comparing
year-to-year variations in capital structure in the same company. This type of financial
statement can be used to allow for easy analysis between companies or between time
periods of a company.

15
 RESEARCH METHODOLOGY
3.1 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It may

be understood as a science of study how research is done scientifically. In this study
the various steps that are generally adopted by the researcher in studying his research
problem along with the logic behind them.

Research design

The proposed study is of DESCIRPTIVE IN NATURE. Research design is needed

because it facilitates the smooth sailing of the various research operations, thereby
making research as efficient as possible. A research design for a particular problem
usually involves the consideration of the following factors.

3.2 DATA COLLECTION

SECONDARY DATA

The Secondary have been collected from company annual report, journal, magazine,
and website.

3.3 PERIOD OF THE STUDY Study periods from 2016-2017 to 2020-2021.

3.3 TOOLS USED FOR STUDY

The following are major tools used in analysis and interpretation.

 Ratio analysis.
 Common size balance sheet statement.
 Comparative balance sheet statement.

16
 CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

4.1 CURRENT RATIO

Table 4.1 Current Ratio (Rs. In crore)

Years Current asset Current liability Current Ratio

( in times)

2016-2017 265522.10 115078.78 2.30

2017-2018 254541.75 111982.87 2.27

2018-2019 297260.58 146225.58 2.03

2019-2020 296040.62 89711.82 3.29

2020-2021 365015.55 153955.55 2.37

source: company annual report 2016-2017 2020-2021

INTERPRETATION: Year 2016 indicates business can pay debts due within one
year out of the current assets. Year 2018 shows low current ratio of 2.03 this indicates
that the business is not well placed to pay its debts. A decline in this ratio can be
attributable to an increase in short-term debt, a decrease in current assets, or a
combination of both.

17
CHART : 4.1

Current Ratio
3.5

2.5

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Current Ratio

18
4.2 ABSOLUTE LIQUIDITY RATIO

Table 4.2 ABSOLUTE LIQUIDITY RATIO (Rs. In crore)

Years Cash-company Current liability Liquidity ratio

(in time)

2016-2017 4467.88 115078.78 0.035

2017-2018 1211.05 111982.87 0.006

2018-2019 3132.25 146225.58 0.012

2019-2020 3233.69 89711.82 0.017

2020-2021 336.86 153955.55 0.005

Source: company annual report 2016-2017 2020-2021

INTERPRETATION: From the table, it is inferred that the absolute liquidity ratio is
high in the year 2016 and 2019 with 0.017 and low in the year 2018 with 0.006. The
current year 2020 cash position ratio has decreased to 0.005 when compared to the
previous year 2019 with 0.017

19
Chart 4.2

Absolute Liquidity Ratio

0.04

0.035

0.03

0.025

0.02

0.015

0.01

0.005

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Absolute Liquidity Ratio

20
4.3 WORKING CAPITAL RATIO

Table 4.3 WORKING CAPITAL RATIO (Rs. In crore)

Years Working capital sales Working capital Ratio

2016-2017 1828.57 3856.75 2.10

2017-2018 1627.25 4318.14 2.65

2018-2019 1855.42 5060.24 2.72

2019-2020 1678.88 5285.42 3.14

2020-2021 1789.15 5188.70 2.90

Source: company annual report 2016-2017 2020-2021

INTERPRETATION: From the above table it is found that the dividend payout ratio
is found to be in the year 2019 with 3.14 and low in the years 2016,2017 and 2020 with
2.65. the current year 2021 dividend payout ratio is found to be decreasing with 2.90
when compared to the previous year.

21
CHART 4.3

Working Capital Ratio

3.5

2.5

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Working Capital Ratio

22
4.4 DEBT EQUITY RATIO

Table 4.4 DEBT EQUITY RATIO (Rs. In crore)

Years Total long term Share holder fund Debt-equity

debt ratio(time)

2016-2017 659.55 3517.66 1.25

2017-2018 619.81 3489.59 1.30

2018-2019 610.69 3530.98 1.28

2019-2020 559.59 3357.46 1.20

2020-2021 834.43 3325.46 1.43

Source: company annual report 2016-2017 2020-2021

INTERPREATION : The debt-equity ratio is another leverage ratio that compares a

company’s total liabilities to its total shareholders’ equity. In the debt ratio, a lower the
percentage means that a company is using less leverage and has a stronger equity
position. In the year 2021 the debt equity ratio is higher which means that the company
is having a higher leverage

23
CHART 4.4

DEBT EQUITY RATIO

1.45

1.4

1.35

1.3

1.25

1.2

1.15

1.1

1.05
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

DEBT EQUITY RATIO

24
 4.5 Debt to total assets ratio

4.6 Table 4.5 Debt to total assets ratio (Rs in crores)

Year Total debt Total assets Debt to total assets

ratio

2016-2017 954.89 5075.49 0.25

2017-2018 856.75 5149.87 0.27

2018-2019 820.80 5098.59 0.31

2019-2020 764.97 5986.98 0.28

2021-2020 1254.43 7586.79 0.35

Source: company annual report 2016-2017 2020-2021

INTERPRETATION: This enables comparisons of leverage to be made across

different companies. The higher the ratio, the higher the degree of leverage, and
consequently, financial risk. This is a broad ratio that includes long-term and short-term
debt (Long term Borrowings maturing within one year), as well as all assets tangible
and intangible. The debt to total asset ratio is higher for the last 3 years this shows that
the company has a higher degree of leverage

25
 Debt to Total Assets Ratio
0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Debt to Total Assets Ratio

26
4.6 FIXED ASSET RATIO

Table 4.6 FIXED ASSET RATIO (Rs. In crore)

Years Fixed asset Long term fund Fixed asset ratio

( in time)

2016-2017 8177.61 503.63 16.23

2017-2018 8602.98 416.31 20.66

2018-2019 9599.18 701.18 13.69

2019-2020 11465.40 1832.34 6.25

2020-2021 13208.60 2162.62 6.10

Source: company annual report 2016-2017 AND 2020-2021

INTERPRETATION: From the above chart it is inferred that the company has
invested same amount in both long term fund and the fixed asset. Even though the
current year (2021) fixed assets are in the decreasing rate that the ratios are equal to
6.10. This means that the company fixed asset position is satisfactory.

27
CHART 4.6

Fixed Asset Ratio

25

20

15

10

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Fixed Asset Ratio

28
4.7 GROSS PROFIT RATIO ( in crore)

Table 4.7 GROSS PROFIT RATIO (Rs. In crore)

Year Gross profit Net sales Gross profit ratio %

2016-2017 1543.88 3856.75 2.49

2017-2018 1545.05 4318.14 2.79

2018-2019 2121.99 5060.24 2.38

2019-2020 2343.49 5285.42 2.25

2020-2021 2221.90 5188.70 2.33

Source: company annual report 2016-2017 2020-2021

INTERPRETATION : The ratio indicates the efficiency of production or trading

operations. In 2016 the gross profit margin was 2.49% In 2017 and 2018, the gross
profit margin was 2.38% and 0.34 used.

29
CHART 4.7

Gross Profit Ratio

3

2.5

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Gross Profit Ratio

30
4.8 NET PROFIT RATIO

Table 4.8 NET PROFIT RATIO (Rs. In crore)

Year Net profit Net sales Net profit ratio %

2016-2017 649.29 3856.75 5.93

2017-2018 555.66 4318.14 7.77

2018-2019 505.89 5060.24 10.00

2019-2020 601.09 5285.42 8.79

2020-2021 761.08 5188.70 6.81

Source: company annual report 2016-2017 2020-2021

INTERPRETATION: In 2016, the company having 5.93 of net profit. In 2017 and
2018, the company having 7.77% and 10.00% of Net Profit. In 2017, The Company
Profit Decrease in 2019 and The company profit increase in 2020.

31
Chart 4.8

Net Profit Ratio

12

10

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Net Profit Ratio

32
4.9 OPERATING PROFIT RATIO

Table 4.9 OPERATING PROFIT RATIO Rs. In crore)

Year Operating Net sales Operating profit

expenses ratio %

2016-2017 1545.04 3856.75 2.49

2017-2018 1972.86 4318.14 2.18

2018-2019 2614.98 5060.24 1.93

2019-2020 2579.70 5285.42 2.04

2020-2021 2172.86 5188.70 2.38

Source: company annual report 2016-2017 2020-2021

INTERPRETATION: In 2016 the company having 2.49 of operating profit. In 2017

and 2018, the company having 2.18 and 1.93 of operating profit. In 2017, the company
profit decrease 2019 and the company profit increase in 2021

33
Chart 4.9

OPERATING PROFIT RATIO

3

2.5

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

OPERATING PROFIT RATIO

34
4.10 DEBTORS TURNOVER RATIO ( in CR)

Table 4.10 DEBTORS TURNOVER RATIO ( in CR)

Year Net sales Average debtors Debtors turnover

ratio( in time)

2016-2017 3856.75 2345.84 1.64

2017-2018 4318.14 2548.93 1.69

2018-2019 5060.24 2699.31 1.87

2019-2020 5285.42 2480.79 2.13

2020-2021 5188.70 2760.69 1.87

Source: company annual report 2016-2017 2020-2021

INTERPRETATION : A higher debtors turnover ratio is more is more favourable

compared with a higher ratio analysis. if debtors turnover ratio reveal that it is
decreasing in the last year signifying that there is an improvement in the utilization

35
Chart 4.10

DEBTORS TURNOVER RATIO

2.5

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

DEBTORS TURNOVER RATIO

36
 CHAPTER V

FUNDING, SUGGESTIONS, CONCLUSION

5.1 FINDING

1. The current year (2021) current ratio is found to be 2.37 it is in a increasing

position.
2. The current year (2021) absolute liquidity ratio is found to be the lowest (0.005)
due to the increase in the liabilities.
3. The current year (2021) working capital ratio has decreased to when compared
2.90 to the previous year 2020 with 3.14
4. The current year (2021) debt equity ratio is found to be increasing with 1.43 when
compared to the previous year with 1.20. This is due to the increase in the net
profit
5. In the year 2021 the debt to total asset is higher which means that the company
is having a higher leverage the current year (2021) fixed assets are in the
increasing rate that the ratios are equal to 0.002. This means that the company
fixed asset position is satisfactory .
6. The current year (2021) and the previous year (2020) ratio is high with 6.10 .This
shows that the company debts are very high and involves higher risk of insolvency.
7. The current year 2021 gross profit ratio has increase to 2.33 when compared to
the previous year 2020 with 2.25
8. The current year 2021 net profit ratio has decrease to 6.81. when compared to the
previous year 2020 with 8.79
9. The current year operation profit ratio has increase to 2.38. when compared to the
previous year 2020 with 2.04
10. The current year debtors turnover ratio has decrease to 1.87. when compared to
the previous year with 2.13.

37
5.2 SUGGESTIONS

1. Company may look into the measures how to reduce the Loans and Advances in
the coming periods.
2. Company may look into maintain the current assets and current liabilities.
Current liabilities may reduce coming periods.
3. It is suggested to the company can strongly focus on cost reduction strategy that
will make a company more profitability.
4. The company has a bright future if it concentrates more on its working capital
short term, investments, thus achieving the overall objectives of the company.
5. Thus it is essential to avoid excessive liquidity but to maintain sufficient liquidity
to ensure smooth running of the company operation.
6. The company has better liquidity position and has to maintain same in the future.
7. In the comparative statement of for the year 2020 and 2021 the current assets of
the year 2021 has been decreased to a great extent. And that the company has
decrease its liabilities and increase it asset to have a good liquidity position
8. In all the 5 years the Ramco cement Company has sold its fixed asset and
reduced its reserves to pay its bills and that care to be taken so that the company
should have a fixed amount as reserve for future.
9. In the current ratio of Ramco cement even though the current assets are twice as
current liabilities there is a fluctuation in the current ratio. The company should
take proper steps to make the ratio in a constant term.
10. In the debt ratio of ramco cement, a lower the percentage means that a company
is using less leverage and has a stronger equity position. In the year 2021 the
ratio is higher (9.67%) which means that the company is having a higher
leverage.

38
5.3 CONCLUSION

The efficient and smooth functioning of all the activities of the company depends upon
the financial performance of the company. The financial performance analysis thus is
a forward-looking exercise as it is helpful in future financial planning decision making.
It determine to analysis forecasting future financial position. Through financial
statement analysis, the present position and operating efficiency of the firm as a whole
and its different departments can be identified. Further, the reasons for change in the
profitability financial position of the firm can be found and necessary measures can be
taken. Financial performance can improve the financial strength of company. The
company liquidity position has to increase and it will solve future problem. The
company is maintaining the reserves and surplus better so it can face financial stress
in the future. To proper maintain of financial performance to achieve the company goal
By analysing the financial performance of the company of the Company it is inferred
that the company financial position is found to be good. The ratios of the company are
satisfactory. The profitability of the company is satisfactory but does not show a higher
change in the profit when compared with the previous years.

39
 REFERENCE
JOURNALS:
Abe De Jong, et al, 2008, Capital structure around the world, the role of firm and
country’s specific determinants, Journal of Banking & Finance, 32(9), pp.1954-1969.
Dirnitios Louzius, 2012, A comparative study of mortage, Business and consumer
loan portfolios, journal of Banking & Finance, 36(4), pp.1012-1027
Malcom and Jeffrey Wurgler, 2002, Market Timing and Capital Structure, Journal
of Finance, HBS
Nadia Zedek, 2016, Product diversification and bank performances: Does ownership
structure matter? Journal of Banking & finance, 71, pp.154-167
Yusuf, G, and Hakan C, 2011, data Envelopment Analysis: An augmented method
for the analysis of firm performance, International release journal of finance and
economics, 79

BOOKS:

John Wild. J Financial Accounting 7th Edition 2017.

Maheshwari S.N Financial Management 9th Edition 2004.
Moorthy. A Financial Management 9th Edition 2018.
Murphy K.R. and Cleveland, J.N. Performance Appraisal: An Organizational
Perspective, Boston: Allyn and Bacon, 1991
Palmer, J.K. and Feldman, Jack M, “Accountability and Need for Cognition Effects
on Contrast, Halo, and Accuracy in Performance Ratings”, Journal of Psychology,
139 (2), 2005, 119-137

40
 APPENDIX

COMPARATIVE BALANCE SHEET

41
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PROFIT AND LOSS ACCOUNT

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