Monica Tulsian (2014) this study mainly focused on Profitability Analysis a comparative study of SAIL & TATA Steel, in this study on a comparative study of SAIL &TATA Steel, The main purpose of a business unit is to make profit. The profitability analysis is done to throw light on the current operating performance and efficiency of business firms. It should be duly noted that net income figure alone is not very helpful in determining the efficiency and performance of the business firm unless it is related to some other figures such as sales, cost of goods sold, operating expenses, capital invested etc. Thus the profitability ratios are calculated to enlighten the end result and comparison of business firms which is the sole criterion of …show more content…
Efficient working capital management is necessary for achieving both liquidity and profitability of a company. A poor and inefficient working capital management leads to tie up funds in idle assets and reduces the liquidity and profitability of a company. Working capital management efficiency is vital especially for manufacturing firms, where a major part of assets is composed of current assets. For an intensive study of working capital management of Indian steel industry focus of the study is on major and significant players of the industry of public and private sector via Steel Authority of India Ltd., Tata Steel Ltd, JSW Steel Ltd. and Essar Steel Ltd. The objective of this study is to measure working capital managing efficiency of selected Indian steel companies for which different activity ratios are used in appraising the efficiency of selected companies. Cash Conversion Cycle (CCC) is a powerful measure for assessing how well a company is managing its working capital. It is used as a comprehensive measure for working capital management and to analyse profitability and performance of selected companies inter firm comparison is done to their judge performance. The ratios of ROCE, assets turnover and …show more content…
This research study shed the light on the reality of the use of the breakeven point in the planning, controlling and decision-making in industrial companies in Jordan. The study sample of the study was formed out of 54 employees in the accounting departments in the Jordanian industrial companies. The study found out that, the most of the Jordanian industrial companies are using break-even point in the planning, controlling and decision-making, and there is a statistical significant relationship between the use of the break-even point and successful planning, control and decision-making in the Jordanian industrial companies. The study has recommended that, companies should use breakeven point as a main tool of decision-making and planning oversight because of its impact, efficiency and accuracy in the rationalization and control
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
The purpose of this report is to indicate the financial position of British Petroleum as compared to its competitors. British Petroleum is the world’s seven super major valuable oil and Gas Company and is the constituent of FTSE 100. The company operates through 17800 service stations all over the world and produces about 3.2 billion barrels per day. The company conducts in operations in almost 80 countries. By market capitalisation the company is ranked at sixth position and has been ranked as fifth in terms of revenue generation in the oil and gas industry. (British Petroleum , 2006). This report analyses the financial position of British Petroleum by analysing its current performance to its last year performance and by analysing the performance
Various ratios are used in this analysis. The organization’s WIP and FG inventory turnover ratios from 2009 demonstrate that the firm takes fewer days to sell both inventories (3.64 days and 73.43 days respectively) than the average firm in the industry In 2009, the total asset turnover ratio for Gemini Electronics was 1.37 while the industry average was 1. This is an indication that Gemini Electronics is generating business at a steady pace. Gemini Electronics is utilizing its fixed assets at a higher rate than other firms in the industry. Their utilization shows the Gemini’s ability to use L, P, & E in order to generate sales. Gemini Electronics A/R is 40.16, which is 25% higher than the industry average. This means Gemini Electronics waits about 40 days to receive payment for goods sold. High levels of A/R can negatively affect the firm and their stock
The cash realization cycle or the cash conversion cycle (CCC) measures the capital efficiency of a company. The efficiency is measured in the number of days it takes to convert the company’s activities which require cash back into cash (Morrow, 2012, page 1). In other words, it is the time it takes to convert from paying the expenses into receiving payment from customers (Morrow, 2012, page 1). It measures the time, in days, needed to sell the inventory and collect the payment.
The financial challenges facing the company in the working capital management simulation showed how companies are able to play a balancing act with incoming and outgoing cash flow floats. Companies can juggle cash flows by withholding payments to retain capital or negotiate with companies that withhold payments to receive an incoming cash flow. Either way, keeping as much cash to fund operations with out heavy financial leveraging was the greatest challenge. Another juggling act was to keep management and business partners happy. The decisions made were not always positive for everyone.
In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1).
Profitability ratios are a category of financial tools that are utilized to evaluate a company’s capability to produce revenue as associated to its expenditures and costs suffered during a specific timeframe. Profitability ratios present numerous gauges of the achievements of a company’s ability to produce revenue. For most of these ratios, having a greater figure in relation to a competitor or previous timeframe is suggestive that the business is flourishing. Common profitability ratios are profit margin, return on assets, and return on equity.
In order for a financial manager to be successful, all 3 of these areas of financial management must be executed properly. Working capital deals with a firm’s short term assets; capital budgeting is the process of planning and managing a firm’s long term investments; capital structure is the mixture of debt and equity maintained by a firm. All 3 of these areas entail different things as explained but together they make up financial management.
Subsequent to obtaining the accounting information, managerial accountants will then proceed to use it to plan, evaluate the company performance and also control the business operations. With regards to planning, the managers are required to make decisions concerning the kind of product to introduce into the market, when to introduce the product and where the production should take place. In performance evaluation, individual product lin...
Making an analysis of the profitability of the shareholder can be seen that although both companies have similar returns, the source of this return is different.
Every company listed on the Bursa Malaysia has nearly identical objective that is to maximize company’s profit and to maximize shareholders’ wealth. To achieve this, the company must have sound financial planning; good financial decision, and improve profitability which will then increase the value of the firm. In order to obtain success, the company must have a well plan and execution of its capital structure.
A financial statement analysis aids in understanding the financial health of a company. By utilizing this evaluative method, investors, shareholders, managers and other affiliated parties are able to determine past, present, and projected performance of a company. Various techniques are used within this evaluative method including horizontal and ratio analysis. These techniques will show a comparison between two or more years of financial data as well as the statistical relationship between the financial data. It is the researcher’s intent to perform a financial statement analysis on Coca Cola Enterprises to demonstrate its potential healthy financial trends to future investors.
However it is also a source of finance. Research shows that over 60% of business investment comes from reinvested, retained profit. · Squeezing Working Capital By cutting stocks, chasing up debtors or delaying payments to creditors, cash can be generated from a firm’s working capital. However, when cash is taken from working capital for a purpose such as
In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.
If there is sufficient working capital than we can assume that it has sound financial position and if the business is under trading than there will be increment in liquid assets which shows that the funds are not been utilized and kept ideal.