A SUMMER TRAINING REPORT ON

“RATIO ANALYSIS”
AT
CENTRAL COALFIELDS LIMITED
RANCHI (Head Quarter)

Submitted by :-
1. Roshan Kumar (17MB600768)
2. Raghunath Soren (17MB600764)
3. Manoranjan Mahto (17MB600758)
4. Bijendra Kumar Singh (17MB600749)
5. Tushar Sharma (17MB600776)
6. Angad Kumar (17MB600740)
7. Shekhar Kumar Balmiki (17MB600772)

1
ACKNOWLEDGEMENT

We would like to express our sincere and deep felt thanks to Mr. A. D.
Wadhwa (Dy. Finance Manager), our project guide, whose valuable
guidance and constant co-operation provided invaluable throughout our study.

We would also like to extend our thanks to all the faculty members of Department
of Management for their encouragement, co-operation and timely suggestions,
without which this project has not been possible.

We thanks all, whose great efforts kept the project moving so that we could
successfully achieve the completion the project.

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DECLARATION

We declare that the summer training project, entitled “RATIO ANALYSIS”

submitted to the CENTRAL COALFIELDS LIMITED,RANCHI (Head Quarter) is a
record of original and independent research work done by us during 1’st June
2018 to 13’th July 2018 under the supervision and guidance of Mr. A.D. WADHWA.

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CONTENTS

Particulars Page no.

Acknowledgment 2

Declaration 3

Objectives of the Project 5

Research methodology 6

Introduction of CIL & CCL 10-24

Ratio Analysis 25-34

Balance Sheet 35

Conclusion 63

Bibliography 65

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OBJECTIVES OF THE STUDY

 TO study and analyze the Ratio Analysis of the CENTRAL COALFIELDS

LIMITED.

 TO study the affairs of the company with reference to the Ratio Analysis and
methods of its estimation used in the company.

 To understand the general performance of the company.

 To use quantities data for defining company’s financial performance.

 To know the profitability, production and efficiency of the firm.

 To analyse the performance effectiveness of the company

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RESEARCH METHODOLOGY

Research Design: The study is based on descriptive and applied research.

Data Source: Both primary and secondary data are used for the collection of the
information required for the report.

Primary data:

1. Interview schedules with officers of account department.

2. Interview schedules with officers of inventory department.

3. Interview schedules with officers of cash department.

4. Interview schedules with officers of purchase department .

Secondary Data:

1. Annual report of the company.

2. Company’s data records.

3. Company’s website.

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EXECUTIVE SUMMARY

The basic idea behind selection of this topic is mainly due to its nature and
importance in overall financial management of any organization. One of the most
important areas in the day to day management of the firm is to know the financial
performance, profitability, production and efficiency of the firm.

Primary function of financial management is not only procurement of fund but also
their effective use with the objective maximizing the owner’s wealth. The
allocation of funds, therefore, is an important function of financial management.

Coal India

India is the third largest coal producing country.

 Contributes around 85% of coal production in India

 Is the largest company in the World in terms of coal production.

 Employs nearly 4.25 lakh persons and is the largest corporate employer in
the country.

 Is one of the largest Companies in the country, turnover being around Rs.
386.31 billion in 2007 – 08.

 Is one of the largest tax payer (corporate Tax Rd. 35.75 billion) in 2007 – 08

 Has paid Dividend of Rs. 17.054 Billion to the Govt. of India in 2007 – 08

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Open cast and underground mining :

Underground mining was the main procedure being followed earlier, the thrust is
shifting from underground to open cast mining. In the 1970s, 80% of the total coal
production was from underground mines. In 1990, underground mines produced
40% of the total output, the remaining 60% being from open cast mines. In the
CCL mines, in 1990-1991, 82.8 % of the mining was open cast, which will increase
further. All of its new projects in the last decade in the east and west Bokaro
coalfields, Ramgarh and North karanpura are open cast mines in Jharkhand state.
The land use in open cast mining is considerable, most of it originally being forest
and agriculture and; Requirement for open cast mines varies with reserves of coal
per unit area, stripping ratio, the type of excavating equipment and the method of
dumping wastes. In an open cast mine in CCL, with a reserve of 345 mt. and
designed to produce about 10 million tones per year, the area of land assessed to
be required is about 1,602 ha for quarries and the rest of a total of 2,281 ha for
magazines, colony, industrial site, etc. This works out to about 7 ha per million
tones of reserves.

The India Coal Sector Environment and Social Mitigation project

(CSESMP)

The India Coal Sector Environment and Social Mitigation Project (CSESMP) was
initially conceived as a component of the Coal Sector Rehabilitation Project (CSRP)
of the World Bank, then it was taken up as a separate project as “the Indian Coal
Sector Environmental and Social Mitigation Project” (CSESMP). Its objective was to
assist the Coal India Ltd. in making coal production more environmentally and
socially sustainable. The three main objectives were to

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i) Enhance CIL’s institutional capacity to deal more effectively with
environmental and social issues.

ii) Implement policies for environmental and Rehabilitation and

Resettlement (R&R) mitigation of affected people.

iii) Help CIL develop its policies for R&R, Community Development,
Environmental Management. These objectives were to be achieved by
means of:-

a) Rehabilitation Action Plans (RAPs) for 14 mines where people were to

be resettled.

b) Indigenous peoples Development Programme (IPDP) in 25 mines for

the villages within 1 km radius of the mines.

c) Capacity building and institutional changes in CIL (appointment and

training of Rehabilitation and Resettlement officers, Public
Information Centre).

d) Appointing NGOs to facilitate the RAPs and IPDPs.

e) Formation of Village Working Group.

f) “Self employment” as the main strategy for economic rehabilitation.

The Coal sector Rehabilitation project (CSRP)

The Coal Sector Rehabilitation Project (CSRP) of the World Bank was formed with
the objective of financing the purchase of mining equipment for modernization
and maintenance of 24 CIL open cast mines, chosen on the basis of a larger
profitability. This would increase the total output of the mines from 78.6 million to
104.6 million tons / year. The loan would also contribute to the overall
modernization and profitability of Coal India. CIL, which is the recipient on the
Indian part, is holding company for 7 subsidiaries, who are owners and managers
of the 25 mines of the project. East Parej is one of the mines owned and operated
by the subsidiary, CCL. The Environment Impact Assessment (EIA) estimates that by
the end of 2004, the project would thus boost Coal India’s annual production to
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about 320 million tons, as compared to the above 240 million tons without the
project. The World Bank Board approved the loan for the CSRP in September 1997.
This loan was due to expire June 2003. However, for reasons this study has been
unable to ascertain, the second phase was cancelled on 24th July 2000. At that time
International Bank for Reconstruction and Development (IBRD) loan disbursements
had reached $ 1.41m. Japanese Bank for International Cooperation (JBIC)
disbursements were the equivalent, JBIC was also cancelled. Reasons for
cancellation of the second phase of loan are rather ambiguous. As per the official
version, the revised demand made by the Dept. of Coal indicated that coal demand
would not grow as fast as initially estimated, and hence with the main equipments
brought in the first stage of the loan, the second phase is not necessary. There
seems to be more. Business line (June 24, 2000) indicated that Government of
India has done little to reconstitute the domestic coal sector which the bank has a
conditionally. This would include amending the Coal Nationalization Act., opening
the mining sector to private sector etc. It is acknowledged that the failure of
Income restoration to resettled communities is also a factor.

COAL INDIA LIMITED

Coal India Limited (CIL) is an Indian state-controlled coal company headquartered

in Kolkata, West Bengal, India and the world's largest coal miner with revenue
exceeding Rs 51,925 Cr (FY2009-10). It was formerly owned entirely by the Union
Government of India, under the administrative control of the Ministry of Coal. It is
involved in coal mining and production industry. In April 2011, CIL was conferred
the Maharatna status by the Union Government of India .

In 2010, CIL's initial public offering (IPO) got subscribed 15.28 times, collecting a
record over Rs 2,40,000 crore (Rs 2,400 billion) – the highest IPO subscription so
far. On the first day of its listing on the Sensex, its stock closed 40% higher than IPO
price.

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Coal India Limited was formed in 1973 as Coal Mines Authority Limited. In 1975 it
was changed to Coal India Limited as a holding company with five subsidiaries:

 Bharat Coking Coal Limited (BCCL)(Dhanbad, Jharkhand)

 Central Coalfields Limited (CCL)(Ranchi, Jharkhand)

 Western Coalfields Limited (WCL)(Nagpur region)

 Eastern Coalfields Limited (ECL)(Sanctoria, Asansol, West Bengal)

 Central Mine Planning and Design Institute Limited (CMPDIL)(Ranchi,

Jharkhand)

In 1985 two more subsidiaries were added:

 South Eastern Coalfields Limited (SECL)(Bilaspur)

 Northern Coalfields Limited, Singrauli (NCL,Singrauli)

In 1992 one more subsidiary added:

 Mahanadi Coalfields Limited (MCL) (Sambalpur)

One International Subsidiary

 Coal India Africana Limited (CIAL) (Mozambique)

Two indirect subsidiaries (held through our subsidiary, Mahanadi Coalfields

Limited)

 MJSJ Coal Limited

 MNH Shakti Limited

Western Coalfields South Eastern Coalfields

Limited Nagpur Ltd. Bilaspur

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Mahanadi Coalfields Limited Northern Coalfields Limited
Sambalpur Singrauli
COAL INDIA
LIMITED
Central Coalfields Limited CALCUTTA Eastern Coalfields Limited
Ranchi Asansol

Bharat Coking Coal North Eatsern Central Mine

Limited Dhanbad Coalfields Planning & Design
Guwahati Institute Ltd.
Ranchi

CENTRAL COALFIELDS LIMITED

Central Coalfields Limited (CCL) is a subsidiary of Coal India Limited (CIL), an

undertaking of the Government of India. CCL manages the nationalized coal mines
of the Coal Mines Authority, Central division. The registered and corporate office is
at Darbhanga House, Ranchi, Jharkhand.

It presently has 63 mines (26 underground, 37 open cast) in areas of East Bokaro,
West Bokaro, North Karanpur, South Karanpur, Ramgarh and Giridih. Their facilites
include seven coal preparation plants, three for non-coking coal and four for
medium coking coal. They earned their Mini Ratna status in 2007.

CCL has been on the coal map of the country as a public sector since October
1956.
CCL are proud to have been on the coal map of the country as a public
sector for over for decades making invaluable contribution in meeting the energy
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demand of the nation and to the socio-economic development of the state of
Jharkhand.

Mission: The mission of CCL is to produce and market the planned quantity of
coal economically with due regard to safety, conservation and quality. The main
trust of CCL in the present context is to orient its operations towards market
requirement maintaining at the same time financial viability to meet the resource
need.

Vision: To become a world class, innovative, competitive & profitable coal

mining operation to achieve customer satisfaction as top priority.

Business objective: Coal mining through efficiently operated mines. Besides

fulfilling coal need of the customer in term of quantity, focus on quality, value
addition and beneficiation to the satisfaction of the customers.

Core values (4Cs):

 Customer Care

 Concern for Environment & Safety

 Care for employees

 Cost consciousness

OVERVIEW OF CCL

CCL are spread over in the districts of Jharkhand. There are 13 areas of CCL they
are:
 Argada
 Barkakhana
 Cs-Cws
 Kuju
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 Hazaribagh
 Rajrappa
 Giridih
 Kothara
 B & K (Bokaro & Kargali)
 Dhori
 NK (North Karnpura Area)
 Piprawar
 Daltanganj

All the above areas send their requisition for capital & revenue expenditure on
week to week basis to CCL Ranchi head quarter.
Depending upon sales realization fund section remittances to different areas
through bank on the basis of this capital & revenue expenditure report send by the
different areas. CCL provides fund to these areas on the basis of pending bill
claims, so this capital & revenue expenditure report must be verified by the two
authorized person of CCL
 Area manager of CCL
 Finance manager of CCL
Marketing of coal as main product:

 To optimize generation of internal resources by improving productivity,

preventing wastage and to mobilize adequate external resources for
meeting investment needs.
 To maintain high standards of safety for accident free coal mining through
safe mining practices and continuous safety audit and risk assessment.
 To conserve environment through of Committed Plan for reclamation and
plantation.
 To maintain the quality of ambient air and water within the prescribed
norms.
 To introduce mass production technology viz. continuous miners etc. for
enhancing underground production of quality coal.
 To operate mega opencast projects using high capacity equipment with
higher availability and utilization secured through long term Maintenance
and Repair Contract (MARC).

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 To beneficiate coal on a substantially larger scale by adding new capacities
and supplying quality coal as per customer’s choice.
 To create an enabling environment for full realization of employee’s
potential through mindset change, customized HRD programmers and
synergic teams.
 To provide adequate number of skilled manpower to run the operations and
impart technical and managerial training for up gradation of skill.
 To improve work life balance by better health care, quality life in townships
and excellent educational facilities.
 To focus on inclusive growth of the community in the command areas of CCL
through a host of CSR measures making mining socially sustainable.

CCL campus is very wide with lots of facilities and departments like:
 Human Resource Development Department
 Finance Department
 Sales Department
 Hospital Facility
 Canteen Facility etc.

ORGANIZATIONAL SET UP OF CCL

The chairman cum Managing Director is the whole time chief executive of the
company. The chief vigilance officer is responsible to see that the work is done
as per the set rules producer and guidelines and being the guilty to book
secretary to board is responsible for keeping the meeting agenda.

The Board of Directors consists of functioned directors and nominees from the
state and central Govt. The functional Directors are for personnel operation etc.
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All functional Directors are indirectly related to the area general managers. Each
area general manager is fully responsible for the performance of the area
having separate project. Officer for each project is supposed to achieve the
projected target fixed by the company as a whole. Each project has a colliery
manager to individually supervise all types of activities like transport,
production sales realization.

The functional director has separate departmental heads namely G.M. sales and
marketing, Quality control, Finance personnel administration. All have separate
work or duties but are indirectly internally related to each other.

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SOCIAL SIDE OF BUSINESS

CCL has played a catalytic role in the socio-economic growth of the Jharkhand
region. For the last 5 decades of its existence, it has virtually brought about a
metamorphosis in many backward areas through its mining activity by creating
employment opportunities and reaching basic infrastructure to many remote and
inaccessible areas. Mining has turned out to be a main source of earning for the
State Exchequer of Jharkhand.

 Major Contributor to Basic Infrastructure:

 Spend over Rs. 1042 crores on social overhead onwards 1998.
 Constructed over 160 kms. of heavy duty coal transportation roads,
300 kms of approach road and equal length of colony roads, 6 major
bridges on river Damodar (2 under construction), 59455 permanent
houses, 19 hospitals, besides water supply schemes covering over a
population of 5.02 lakhs.
 Grant in aid & infrastructure facilities to 195 educational institutions.
 Building permanent road link “COAL TRUNK ROAD” of about 196 kms
length linking its areas and various districts.

 Major Employer:
 62827 (as on 1.11.2006) directly employed (35% belonging to
scheduled caste & scheduled tribes).
 Sources of indirect employment to over 2, 00, 000 people in loading,
transportation, civil construction, small industries, coke ovens,
manufacturing agencies, ancillaries etc.

 Major Contributor to State Exchequer:

 State central Exchequer have earned over Rs. 2811.56 crores of
royalty and other taxes from CCL’s mining activities after formation of
Jharkhand state. (2000-01 to 2005-06)

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Community Development

CCL has been contributing to community development and tribal welfare by

augmenting drinking water facilities, health care, education, rural and link roads,
besides promoting trades for self-employment opportunities in around 500 villages
adjacent to its areas of operation. Community Development Programme was
initiated in 1981 and since then it has spent over Rs. 18 crores on these activities.

 New Projects
The following projects have been taken up by CCL in X
plan to augment coal production and to meet the demand of nation:

 Magadh open coal (12 Mty)

 Amrapali open coal (12 Mty)
 Ashok Expansion open coal (6.5 Mty)
 North Urimari open coal ( 3 Mty)
 Karo open coal (3.5 Mty)
 Konar open coal (3.5 Mty)

 Safety
Safety in mines is CCL’s first priority. The work in mines of
CCL is carried out as per the provision laid down in the Coal Mines Regulation,
1957 under the Mines Act, 1952 as per the permission and guidance of Director
General of Mines Safety. We have three tier system of safety committee, viz. Unit,
Area and Corporate level to review, formulate and suggest safety measures of
mines. In addition to supply personal protective equipments, free periodicals
medical check-up is being carried out to each worker every five years. Safety
Fortnight is also being organized every year and best area and best workmen are
rewarded to keep them aware related to Safety in mines. There is an emergency
cell in CCL for dealing emergency.

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ENVIRONMENT

Eco-friendly mining techniques concept are being followed to keep our

environment safe. CCL is adopting concurrent reclamation for projects like
Piparwar, Ashoka, KDH and Parej East OCP. In other projects decoaled area is
reclaimed through internal dumping and subsequently planted. Plantation is also
being done on external dumps. A green belt is also created around quarry, CHPs
etc. by planting rows of trees to arrest fugitive dust as well as the noise. In addition
to this, regular water spraying on haul roads by mobile water sprinklers are being
done to suppress air pollution. In some of the fields fixed water sprinkles are also
provided. Company is providing domestic gas to our workmen in lieu of coal to
avoid air pollution. Not only this, regular monitoring of ambient air and water,
quality of each mines are being carried out to check environment.

 CCL’s Coal Consumers

 More than 20 thermal Power stations including those in Jharkhand.
 Five Steel Plants.
 Five Fertilizer Plants.
 20 Cement Plants.
 Around 600 Industrial units Large, Medium and Small Scale.

 Products
 Raw Coal
 Washed Non-Coking Coal
 Washed Medium Coking Coal
 Hard Coke
 Coal Tar
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CCL STRIVE

To make Jharkhand state rich and strong and also to help in establishing coal based
industries in this region.

Land Marks of CCL

 1815 Coal mining started in India

 1850 Private railway started coal mining in India
 1925 First Nationalization of coal mining by Railway board
 1944 Railway collieries transferred to coal board under coal
Commissioner
 1956 National coal development corporation limited. (NCDC)
formed as the first public sector coal company under central
govt. with 11 states railway collieries and annual production of
3.11 million tones.
 1959 First coal washery at Kargali setup.
 1971 Nationalization of coking coal mines – BCCL formed.
 1973 Nationalization of Non-coking coal mines – CMAL formed and
NCDC becomes central division of CMAL.
 1975 Coal India Limited formed as the holding company for coal.
Entire coal industry under public sector reorganized under CIL’s
central umbrella. NCDC (central division of CMAL) renamed
central coalfield limited. (CCL)
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 1986 Reorganization of CCL Singrauli and Talchar areas become
separate companies viz. N.C.L. and M. C. L.
 2005 11 areas, 63 mines, 07 washeries, 1 central workshop (ISO-
9001 certified), 5 Regional workshops out of which 03 are ISO-
9001 certified. Central Hospital, Gandhi Nagar (ISO-9001
Certified).
 2006 Recorded highest profit of Rs. 1165 crores in the history of
CCL and for the first time paid Rs. 291.40 crores as dividend.
 2007 Registered a profit of Rs. 1020 crores.

CCL – At a Glance

 No. of Mines: 63 Mines under 13 areas (26 underground & 37 opencast

mines).

 Washeries: 7 washeries, 4 medium coking coal washeries, 3 non

coking coal washeries.

 Workshop: 1 central workshop, 5 regional workshops (the Central

workshop & regional workshops are ISO-9001 Certified).

 Operating coal field: 6 (East Bokaro, West Bokaro, North Karanpura,

South Karanpura, Ramgarh, Giridih).

 Major Consumers: Power Sectors, Steel Sectors, Cement & Fertlizer Sectors
and Others (like sponge iron, SSF/BRK and Others etc.).

 Command area: 2600 sq. kms. spread over Giridih, Bokaro, Ranchi, Chatra,
Hazaribagh, Latehar and Palamu Districts of Jharkhand state.

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 Total lease hold area: 762 sq. km.

 Hospital: 2 central hospitals (1 C.H. at Ranchi is ISO- 9001 Certified), 1

Central hospital Naisarai, 7 Regional hospitals, 10 colliery hospitals, 63
Dispensaries.

SWOT analysis of CCL:

STRENGTH –
1. CIL (holding company of CCL) has the monopoly in coal production in India,
so there is no competition in the field of coal production.
2. It is a public sector.
3. There is no competition with private parties.
4. It is very strong in its corporate social responsibilities.
5. It has large and trained manpower resources.
6. It has large stock of coal.
7. It always remains updated with the new technologies.
8. It has vast experience in this field from a long time.

WEAKNESS –
1. Its major consumers are government organizations, which results in non-
realization of dues, time to time.
2. This organization is suffering from bureaucracy.
3. The average age of working employees is very high.
4. It has the indifferent attitude toward its customers.
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OPPORTUNITIES –
1. To develop new coal mining areas.
2. To face competition due to existing strength.
3. It has the government’s support.

THREAT –
1. To have the competition from big private corporate houses.
2. Threat from new product development by private parties, like gasification of
coal or liquefied coal.
3. Distribution of the customers in case of government’s permission to the
competition with the private parties.
4. The attitude of employees towards the organization.

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RATIO ANALYSIS

A ratio analysis is a quantitative analysis of information contained in a

company’s financial statements. Ratio analysis is used to evaluate various
aspects of a company’s operating and financial performance such as its
efficiency, liquidity, profitability and solvency.

Ratio analysis involves evaluating the performance and financial health of a

company by using data from the current and historical financial statements.
The data retrieved from the statements is used to - compare a company's
performance over time to assess whether the company is improving or
deteriorating; compare a company's financial standing with the industry
average; or compare a company to one or more other companies operating
in its sector to see how the company stacks up.

Ratio Analysis as a tool possesses several important features. The data,

which are provided by financial statements, are readily available. The
computation of ratios facilitates the comparison of firms which differ in size.
Ratios can be used to compare a firm's financial performance with industry
averages. In addition, ratios can be used in a form of trend analysis to
identify areas where performance has improved or deteriorated over time.
Because Ratio Analysis is based upon Accounting information, its
effectiveness is limited by the distortions which arise in financial statements
due to such things as Historical Cost Accounting and inflation. Therefore,
Ratio Analysis should only be used as a first step in financial analysis, to
obtain a quick indication of a firm's performance and to identify areas which
need to be investigated further.
While there are numerous financial ratios, ratio analysis can be categorized
into following main groups:

1. Liquidity Ratios: Liquidity ratios measure a company's ability to pay off its
short-term debts as they come due using the company's current or quick
assets. Liquidity ratios asses a business’s liquidity, i.e. its ability to convert its
assets to cash and pay off its obligations without any significant difficulty
(i.e. delay or loss of value). Liquidity ratios are particularly useful for
suppliers, employees, banks, etc. Important liquidity ratios are:
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(a). Current Ratio: Current ratio is one of the most fundamental liquidity
ratio. It measures the ability of a business to repay current liabilities with
current assets.
Current assets are assets that are expected to be converted to cash within
normal operating cycle, or one year. Examples of current assets include cash
and cash equivalents, marketable securities, short-term investments,
accounts receivable, short-term portion of notes receivable, inventories and
short-term prepayments.
Current liabilities are obligations that require settlement within normal
operating cycle or next 12 months. Examples of current liabilities include
accounts payable, salaries and wages payable, current tax payable, sales tax
payable, accrued expenses, etc.

Formula:-
Current ratio is calculated using the following formula:

Current Ratio = Current Assets/ Current Liabilities

(b). Quick Ratio:- Quick ratio (also known as asset test ratio) is a liquidity
ratio which measures the dollars of liquid current assets available per dollar
of current liabilities. Liquid current assets are current assets which can be
quickly converted to cash without any significant decrease in their value.
Liquid current assets typically include cash, marketable securities and
receivables. Quick ratio is expressed as a number instead of a percentage.
Quick ratio is a stricter measure of liquidity of a company than its current
ratio. While current ratio compares the total current assets to total current
liabilities, quick ratio compares cash and near-cash current assets with
current liabilities. Since near-cash current assets are less than total current
assets, quick ratio is lower than current ratio unless all current assets are
liquid. Quick ratio is most useful where the proportion of illiquid current
assets to total current assets is high. However, quick ratio is less
conservative than cash ratio, another important liquidity parameter.

Formula

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Quick ratio is calculated by dividing liquid current assets by total current
liabilities. Liquid current assets include cash, marketable securities and
receivables.
The following is the most common formula used to calculate quick ratio:

Quick Ratio= (Cash + Marketable Securities + Receivables) / Current

Liabilities

*Cash includes cash in hand and cash at bank.

*Marketable securities are those securities/investments which can be easily
converted to cash, i.e. within a short period of time at a negligible, if any,
decrease in its value. Examples include government treasury bills, shares
listed on a stock exchange, etc.
*Receivables include accounts receivable, notes receivable, etc.
Another approach to calculation of quick ratio involves subtracting all illiquid
current assets from total current assets and dividing the resulting figure by
total current liabilities. Illiquid current assets are current assets which can’t
be easily converted to cash i.e. prepayments, advances, advance taxes,
inventories, etc.

Quick Ratio :- (Current Assets − Inventories – Prepayments) / Current

Liabilities

(c)Cash ratio : Cash ratio is the ratio of cash and cash equivalents of a
company to its current liabilities. It is an extreme liquidity ratio since only
cash and cash equivalents are compared with the current liabilities. It
measures the ability of a business to repay its current liabilities by only using
its cash and cash equivalents and nothing else.

Formula
Cash ratio is calculated using the following formula:

Cash Ratio = (Cash + Cash Equivalents) / Current Liabilities

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*Cash equivalents are assets which can be converted into cash quickly
whereas current liabilities are those liabilities which are to be settled within
12 months or the business cycle.
2. Solvency Ratios : Solvency ratios assess the long-term financial viability of
a business i.e. its ability to pay off its long-term obligations such as bank
loans, bonds payable, etc. Information about solvency is critical for banks,
employees, owners, bond holders, institutional investors, government, etc.
Key solvency ratios are:
(a) Debt Ratio : Debt ratio (also known as debt to assets ratio) is a ratio
which measures debt level of a business as a percentage of its total assets. It
is calculated by dividing total debt of a business by its total assets.
Debt ratio finds out the percentage of total assets that are financed by debt
and helps in assessing whether it is sustainable or not. If the percentage is
too high, it might indicate that it is too difficult for the business to pay off its
debts and continue operations.
Formula
Debt ratio is calculated using the following formula:
Debt Ratio = Total Debt/ Total Assets

*Total debt equals long-term debt and short-term debt. It is not equivalent
to total liabilities because it excludes non-debt liabilities such as accounts
payable, salaries payable, etc.
*Total assets include both current assets and non-current assets.
Sometimes, debt ratio is calculated based on the total liabilities instead of
total debt.

(b) Debt-to-Equity Ratio: Debt-to-Equity ratio is the ratio of total liabilities of

a business to its shareholders' equity. It is a leverage ratio and it measures
the degree to which the assets of the business are financed by the debts and
the shareholders' equity of a business.

Formula
Debt-to-equity ratio is calculated using the following formula:

Debt-to-Equity Ratio = Total Liabilities/ Shareholders' Equity

28
*Both total liabilities and shareholders' equity figures in the above formula
can be obtained from the balance sheet of a business. A variation of the
above formula uses only the interest bearing long-term liabilities in the
numerator.

(c) Debt-to-Capital Ratio: Debt-to-capital ratio is a solvency ratio that

measures the proportion of interest-bearing debt to the sum of interest-
bearing debt and shareholders' equity.
Interest-bearing debt includes bonds payable, bank loans, notes payable,
etc. Non-interest bearing debt includes trade payable, accrued expenses,
etc.
The debt-to-capital ratio is a refinement of the debt-to-assets ratio. It
measures how much of the capital employed (i.e. the resources on which
the company pays a cost) is debt. Higher debt included in the capital
employed means higher risk of insolvency.

Formula
Debt-to-Capital Ratio = Interest-bearing Debt/(Interest-bearing Debt +
Shareholders' Equity)

3. Profitability Ratios: Profitability ratios measure the ability of a business to

earn profit for its owners. While liquidity ratios and solvency ratios explain
the financial position of a business, profitability ratios and efficiency ratios
communicate the financial performance of a business. Important
profitability ratios include:
(a) Net Profit Margin: Net profit margin (also called profit margin) is the
most basic profitability ratio that measures the percentage of net income of
an entity to its net sales. It represents the proportion of sales that is left over
after all relevant expenses have been adjusted.
Net profit margin is used to compare profitability of competitors in the same
industry. It can also be used to determine the profitability potential of
different industries. While companies in some industries are able to
generate high net profit margin, other industries offer very narrow margins.
It depends on the extent of competition, elasticity of demand, production
differentiation, etc. of the relevant product or market.

29
Return on equity and return on assets are other relevant ratios that measure
the relationship of net income with shareholders' equity and total assets
respectively.

Formula
Net Profit Margin = Net Income/ Net Sales

*Net Sales = Gross Sales − Sales Tax − Discounts − Sales Returns

(b) Gross Margin Ratio: Gross margin ratio is the ratio of gross profit of a
business to its revenue. It is a profitability ratio measuring what proportion
of revenue is converted into gross profit (i.e. revenue less cost of goods
sold).
Formula
Gross margin is calculated as follows:

Gross Margin = Gross Profit/ Revenue

*Gross profit and revenue figures are obtained from the income statement
of a business. Alternatively, gross profit can be calculated by subtracting cost
of goods sold from revenue. Thus gross margin formula may be restated as:

Gross Margin = (Revenue − Cost of Goods Sold)/ Revenue

(c) Operating Margin Ratio: Operating margin ratio or return on sales ratio is
the ratio of operating income of a business to its revenue. It is profitability
ratio showing operating income as a percentage of revenue.
Formula
Operating margin ratio is calculated by the following formula:

Operating Margin = Operating Income/ Revenue

*Operating income is same as earnings before interest and tax (EBIT). Both
operating income and revenue figures can be obtained from the income
statement of a business.

30
(d) Return On Assets (ROA) Ratio: Return on assets is the ratio of annual net
income to average total assets of a business during a financial year. It
measures efficiency of the business in using its assets to generate net
income. It is a profitability ratio.
Formula
The formula to calculate return on assets is:

ROA = Annual Net Income/ Average Total Assets

*Net income is the after tax income. It can be found on income statement.
Average total assets are calculated by dividing the sum of total assets at the
beginning and at the end of the financial year by 2 . Total assets at the
beginning and at the end of the year can be obtained from year ending
balance sheets of two consecutive financial years.
(e) Return on Capital Employed (ROCE): Return on capital employed (ROCE)
is the ratio of net operating profit of a company to its capital employed. It
measures the profitability of a company by expressing its operating profit as
a percentage of its capital employed. Capital employed is the sum of
stockholders' equity and long-term finance. Alternatively, capital employed
can be calculated as the difference between total assets and current
liabilities. The formula to calculate return on capital employed is:

ROCE = Net Operating Profit/ Capital Employed

A more accurate value can be calculated by using average capital employed

which is the sum of average long-term finance and average stockholders'
equity.Some analysts use earnings before interest and tax (EBIT) instead of
net profit while calculating return on capital employed.
Since ROCE includes long-term finance in the calculation, therefore it is more
comprehensive test of profitability as compared to return on equity (ROE).
(f) Return On Equity (ROE) Ratio: Return on equity (also called return on
shareholders equity) is the ratio of net income of a business during a year to
its average shareholders' equity during that year. It is a measure of
profitability of shareholders' investments. It shows net income as a
percentage of shareholder equity.
Formula
31
The formula to calculate return on equity is:

ROE = Annual Net Income/ Average Stockholders' Equity

*Net income is the after tax income whereas average shareholders' equity is
calculated by dividing the sum of shareholders' equity at the beginning and
at the end of the year by 2. The net income figure is obtained from income
statement and the shareholders' equity is found on balance sheet. You will
need year ending balance sheets of two consecutive financial years to find
average shareholders' equity.
(g) Earnings per Share (EPS): Earnings per share (EPS) is a profitability
indicator which shows dollars of net income earned by a company in a
particular period per share of its common stock (also called ordinary shares).
Earnings per share is calculated by dividing net income for a period
attributable to common stock owners by the weighted average number of
common shares outstanding during the period.
EPS is a very important profitability ratio, particularly for shareholders of a
company, because it is a direct measure of dollars earned per share.
Accounting standards (such as IAS 33 in IFRS framework and ASC 260 in US
GAAP) require companies that have securities that are publically traded or
which are in process of issuing publically tradable securities, to report EPS
figures on the face of their income statement.
4. Activity Ratios/Efficiency Ratios :- Activity ratios assess the efficiency of
operations of a business. For example, these ratios attempt to find out how
effectively the business is converting inventories into sales and sales into
cash, or how it is utilizing its fixed assets and working capital, etc. Key
activity ratios are:
(a) Inventory Turnover Ratio: Inventory turnover is an efficiency ratio which
calculates the number of times per period a business sells and replaces its
entire batch of inventories. It is the ratio of cost of goods sold by a business
during an accounting period to the average inventories of the business
during the period.
Dividing the total cost of inventories sold during a period (which equals cost
of goods sold) by the cost of average inventories balance maintained by a
business gives us dollars of sales made per dollar of cash tied up in
inventories.
32
Formula
Inventory turnover ratio is calculated using the following formula:

Inventory Turnover = Cost of Goods Sold/ Average Inventories

*Cost of goods sold = Beginning Inventories + Cost of Goods Manufactured –

Ending Inventories

(b) Accounts Receivable Turnover Ratio: Accounts receivable turnover is the

ratio of net credit sales of a business to its average accounts receivable
during a given period, usually a year. It is an activity ratio which estimates
the number of times a business collects its average accounts receivable
balance during a period.
Formula
Accounts receivable turnover is calculated using the following formula:

Receivables Turnover = Net Credit Sales/ Average Accounts

Receivable

*We can obtain the net credit sales figure from the income statement of a
company. Average accounts receivable figure may be calculated simply by
dividing the sum of beginning and ending accounts receivable by 2. The
beginning and ending accounts receivable can be found on the balance
sheets of the first and the last day of the accounting period.
Accounts receivable turnover is usually calculated on annual basis, however
for the purpose of creating trends, it is more meaningful to calculate it on
monthly or quarterly basis.
(c) Accounts Payable Turnover Ratio: Accounts payable turnover is the ratio
of net credit purchases of a business to its average accounts payable during
the period. It measures short term liquidity of business since it shows how
many times during a period, an amount equal to average accounts payable is
paid to suppliers by a business.
Formula
Accounts payable turnover is usually calculated as:

33
Payables Turnover = Net Credit Purchases/ Average Accounts Payable

*To calculate average accounts payable, divide the sum of accounts payable
at the beginning and at the end of the period by 2. Net credit purchases
figure in the denominator is not easily discoverable since such information is
not usually available in financial statements. It is to be search for in the
annual report of the company. Sometimes cost of goods sold is used in the
denominator instead of credit purchases.
(d) Fixed Assets Turnover Ratio: Fixed assets turnover ratio is an activity
ratio that measures how successfully a company is utilizing its fixed assets in
generating revenue. It calculates the dollars of revenue earned per one
dollar of investment in fixed assets.
A higher fixeds asset turnover ratio is generally better. However, there might
be situations when a high fixed asset turnover ratio might not necessarily
mean efficient use of fixed assets as explained in the example.
Formula
Fixed Assets Turnover Ratio = Net Revenue/ Average Fixed Assets

*Net Revenue = Gross Revenue − sales returns

*Average Fixed Assets = Opening Balance of Fixed Assets + Ending Balance
of Fixed Assets

(e) Working Capital Turnover: Working capital turnover ratio is an activity

ratio that measures dollars of revenue generated per dollar of investment in
working capital. Working capital is defined as the amount by which current
assets exceed current liabilities.
A higher working capital turnover ratio is better. It means that the company
is utilizing its working capital more efficiently i.e. generating more revenue
using less investment.
Formula
Working Capital Turnover Ratio = Revenue/ Average Working Capital

*Average Working Capital = (Opening Working Capital + Closing Working

Capital) / 2

34
BALANCE SHEET

For the year ending 31st 2017 2016 2015 2014 2013
March
A Related to ASSET &
LIABILITY
(1) (i) No. of equity shares of RS `9400000 9400000 9400000 9400000 9400000
1000/- each.
(ii)Shareholder’s Fund
(a) Equity 940 940.00 940.00 940.00 940.00
(b) Reserves 2029.00 1958.94 1863.20 1589.17 1307.04
(c)Accumulated 276.42 3319.18 3009.18 1973.78 1761.01
Profit and loss
Net Worth 3245.42 6218.12 5812.38 4502.95 4008.08

(2) (a) Long term borrowings 1500.00 0.00 0.00 0.00 86.90
Incl. current maturities.
(b) Long term borrowing 1200.00 0.00 0.00 0.00 69.92
Excel current maturities.
(3) Net Fixed Assets 2667.15 2748.37 1753.75 1613.39 1397.82

35
(4) (i) Current Assets 6958.02 8557.45 8521.30 7680.77 7478.95
(ii)Current Liabilities 6568.79 5210.14 4181.50 4250.67 4017.45
Net current Assets/working 389.23 3347.31
Capital
(5) (i) Capital employed 3056.38 6095.68 6093.55 5043.49 4859.32
(i)Capital work in progress 1141.23 303.40 0.00 0.00 0.00
Capital employed including 4197.61 6399.08 6093.55 5043.49 4859.32
CWIP
(6) (a) Trade Receivables (Net) 1293.79 1365.43 1465.57 1875.72 1533.87
(b) Cash & Bank Balances 1674.15 4058.77 3947.62 2816.37 3560.44
(7) Closing stock of :
(a)Stores & Spares(Net) 164.78 172.54 166.87 147.18 149.67
(b)Coal & Cokes etc (Net) 1925.17 1313.62 1178.54 1067.28 1103.23
(C)Other Inventories(Net) 6.31 5.10 5.73 4.87 5.74
(8) Average Stock of stores & 168.66 169.71 157.03 148.43 148.27
Spares (Net)
(B) Releted to profit/ loss
(1) (a) Gross Margin (PBDIT) 2838.16 3651.94 3053.97 2786.55 2924.86
(b)Gross Profit (PBIT) 2465.53 3251.36 2741.42 2532.45 2689.65
(c)Profit before Tax 2393.65 3174.10 2740.34 2525.87 2683.56
(including other Comp.
Income)
(d)Total Comprehensive 1401.14 1970.06 0.00 0.00 0.00
Income(After Tax)
(e)Net Profit (After Tax, 2972.70 90.15 1344.02 494.87 570.70
Divident & DDT)

(2) (a) Gross Sales 14899.71 13658.81 11781.43 10493.37 10580.10

(b) Net Sales (after levies) 10408.41 10535.30 9474.99 8556.01 8556.24
(c) Sale Value of production 11021.02 10671.29 6734.65 6030.14 5872.68

(3) Cost of Goods Sold (Net 8014.76 7361.20 6734.65 6030.14 5872.68
Sales- Profit)
(4) (a) Total Expenditure 8962.97 8189.84 7332.19 6655.08 6554.32
(B)Employee Benefit 4401.73 4009.92 3897.19 3509.20 3522.47
Expenses
(c)Cost of materials 799.50 807.63 837.64 733.93 625.73
Consumed
(d) Power & Fuel 290.92 294.40 278.19 266.58 358.82
(e)Finance cost & 444.51 477.84 313.63 262.08 242.76
Depreciation
(5) Avg. consump. Of stores & 66.63 67.30 69.80 61.16 52.14
Spares(Gross) per month
(6) Avg. manpower employed 42919 44346 45849 47406 49076
during the year
(7) (a) Value Added 9930.66 9569.33 8471.30 7519.02 7296.51
(b) ValueAdded per 2313.84 2157.88 1847.67 1586.09 1486.78
Employee

36
CALCULATION OF RATIO ANALYSIS FOR FIVE YEARS:

1. LIQUIDITY RATIO:

A. CURRENT RATIO:

Current Ratio = Current Assets/Current Liabilities

FOR 2017:

Current Ratio=Current Assets /Current Liabilities

Current Ratio=6958.02/6568.79
=1.06

FOR 2016:

Current Ratio=Current Assets /Current Liabilities

Current Ratio = 8557.45/5210.14

=1.64

37
FOR 2015:

Current Ratio=Current Assets /Current Liabilities

Current Ratio = 8521.30/4181.50

=2.03

FOR 2014:

Current Ratio=Current Assets /Current Liabilities

Current Ratio = 7680.77/4250.67

=1.8

FOR 2013:

Current Ratio=Current Assets /Current Liabilities

Current Ratio= 7478.95/4017.45

=1.86

B. QUICK RATIO:

Quick Ratio= Liquid Assets/Current Liabilities Where, Liquid Assets = Current

Assets-Inventories

FOR 2017:

Liquid Assets= 6958.02-2096.26

= 4861.76

Quick Ratio= Liquid Assets/ Current Liabilities

=4861.76/6568.79
=0.74

38
FOR 2016:

Liquid Assets= 8557.45-1491.26

=7066.45

Quick Ratio = Liquid Assets/ Current Liabilities

=7066.45/5210.14
=1.356

FOR 2015:

Liquid Assets = 8521.30-1351.14

=7170.16

39
Quick Ratio= Liquid Assets/ Current Liabilities
=7170.16/4181.50
=1.71

FOR 2014:

Liquid Assets=7680.77-1219.33
= 6461.44

Quick Ratio = Liquid Assets/ Current Liabilities

= 6461.44/4250.67
=1.52

FOR 2013:

Liquid Assets = 7478.95-1258.64

= 6220.31

Quick Ratio= Liquid Assets/ Current liabilities

= 6220.31/4017.45
= 1.54

C. ABSOLUTE LIQUID RATIO:

Absolute Liquid Ratio= Absolute Liquid Assets/Current Liabilities Where,

Absolute Assets= Marketable securities+ Cash+ Bank

FOR 2017:

Absolute Liquid Assets= 1293.79+1674.15

= 2967.94

Absolute Liquid Ratio= Absolute Liquid Assets/ Current Liabilities

=2967.94/6568.79
= 0.45
40
FOR 2016:

Absolute Liquid Assets = 1365.43+4058.77

=5424.2

Absolute Liquid Ratio = Absolute Liquid Assets/ Current Liabilities

=5424.2/5210.14
=1.04

41
FOR 2015:

Absolute Liquid Assets = 1465.57+3947.62

= 5413.19

Absolute Liquid Ratio= Absolute Liquid Assets/ Current liabilities

= 5413.19/4181.50
= 1.29

FOR 2014:

Absolute Liquid Assets = 1875.72+2816.37

= 4692.09

Absolute Liquid Ratio = Absolute Liquid Assets/Current liabilities

= 4692.09+4250.67
= 1.1

FOR 2013:

Absolute Liquid Assets = 1533.87+3560.44

= 5094.31

Absolute Liquid Ratio = Absolute Liquid Assets/ Current Liabilities

= 5094.31/4017.45
= 1.26

2. PROFITABILITY RATIOS:

A. GROSS PROFIT RATIO:

Gross Profit Ratio= Gross Profit/Net Sales X 100

FOR 2017:

Gross Profit Ratio= Gross profit/ Net Sales X 100

42
= 2465.53/10408.41 X 100
=23.68

FOR 2016:

Gross Profit Ratio= Gross Profit/ Net Sales X 100

= 3251.36/10535.30 X 100
= 30.86

FOR 2015:

Gross Profit Ratio = Gross Profit / Net Sales X 100

= 2741.42/9474.99 X 100
= 28.93

43
FOR 2014:

Gross Profit Ratio = Gross Profit/ Net Sales X 100

= 2532.45/8556.01 X 100
= 29.59

FOR 2013:

Gross Profit Ratio = Gross Profit/ Net Sales X 100

= 2689.65/8556.24 X 100
= 31.43

B. OPERATING COST RATIO:

Operating Cost Ratio = Operating Cost/Net Sales X 100

Operating Cost = Employee Benefit Expenses + Cost of Material Consumed+

Finance Cost & Depreciation + Total Expenditure+ Power & Fuel

FOR 2017:

Operating Cost = 4401.73+ 799.50+ 444.51+ 8962.97 + 290.92

=14899.63

Operating Cost Ratio = Operating Cost / Net Sales X 100

= 14899.63/10408.41 X 100
=143

FOR 2016:

Operating Cost = 4009.92+ 807.63 + 477.84 + 8189.84+ 294.40

= 13779.63

Operating Cost Ratio = Operating Cost / Net Sales X 100

= 13779.63/10535.30 X 100
44
= 130

FOR 2015:

Operating Cost = 3897.19+ 837.64 + 313.63 + 7332.19 + 278.19

= 12658.84

Operating Cost Ratio = Operating Cost / Net Sales X 100

= 12658.84/9474.99 X 100
= 133

FOR 2014:

Operating Cost = 3509.20 + 733.93 + 262.08 + 6655.08 + 266.58

= 11426.87

45
Operating Cost Ratio = Operating Cost / Net Sales X 100
= 11426.87/8556.01 X 100
= 133

FOR 2013 :

Operating Cost = 3522.47 + 625.73+ 242.76 + 6554.32 + 358.82

= 11304.1

Operating Cost Profit = Operating Cost / Net Sales X 100

= 11304.1/8556.24 X 100
= 132

C. RETURN ON INVESTMENT RATIO:

Return on Investment Ratio = Net profit After Interest and

Taxes/Shareholder Funds
= or Investments X 100

FOR 2017:

Return on Investment Ratio = 2972.70/3245.42 X 100

= 91

FOR 2016:

Return on Investment Ratio = 90.15/ 6218.12 X 100

= 1.45

FOR 2015:

Return on Investment ratio = 1344.02/5812.38 X 100

= 23.1

FOR 2014:
46
Return on Investment Ratio = 494.87/4502.95 X 100
= 10.98

FOR 2013:

Return on Investment ratio = 570.70/4008.08 X 100

= 14.23

D. RETURN ON CAPITAL EMPLOYED RATIO:

Return on Capital employed Ratio = Net profit After Taxes/Gross capital

Employed X
100

47
FOR 2017:

Return on Capital employed ratio = Net profit After taxes/ gross capital
Employed X
100

Return on Capital employed ratio = 2972.70/ 4197.61 X 100

= 70.81

FOR 2016:

Return on capital employed Ratio = 90.15/6399.08 X 100

= 1.4

FOR 2015:

Return on capital employed ratio = 1344.02/ 6093.55 X 100

= 22.05

FOR 2014:

Return on capital employed ratio = 494.87/5043.49 X 100

= 9.81

FOR 2013:

Return on capital employed ratio = 570.70/4859.32 X 100

= 11.74

E. EARNING PER SHARE RATIO:

Earning per share ratio = Net Profit After Tax & Prefence Divident/ No. of
equity
Shares

48
FOR 2017:

No. of equity share = 9400000/1000

= 9400

Earning per share ratio = 2972.70/9400

= 0.31

FOR 2016:

No. of equity share = 9400000/1000

= 9400

Earning per share ratio = 90.15/9400

= 0.0095

49
FOR 2015:

No. of equity share = 9400000/1000

= 9400

Earning per share ratio =1344.02/9400

= 0.1429

FOR 2014:

No. of equity share = 9400000/1000

= 9400

Earning per share ratio= 494.87/9400

= 0.0526

FOR 2013:

No. of equity share = 9400000/1000

= 9400

Earning per share ratio = 570.70/9400

= 0.060

F. EARNING PER EQUITY SHARE :

Earning per equity share= Net profit After tax & Preference Dividend/No.
equity share

FOR 2017:

No. of equity share = 9400000/1000

= 9400
50
Earning per equity share= 2972.70/9400
= 0.3162

FOR 2016:

No. of equity share = 9400000/1000

= 9400

Earning per equity share =90.15/9400

= 0.009

51
FOR 2015:

No. of equity share = 9400000/1000

= 9400

Earning per equity share = 1344.02/9400

= 0.142

FOR 2014:

No. of equity share = 9400000/1000

= 9400

Earning Per equity share = 494.87/9400

=0.052

FOR 2013:

No. of equity share = 9400000/1000

= 9400

Earning Per equity Share = 570.70/9400

= 0.060

G. NET PROFIT TO NET WORTH RATIO:

Net profit to net worth ratio = Net profit after taxes / Shareholders Net
Worth X 100

FOR 2017:

Net profit to net worth ratio = 2972.70/3045.42 X100

= 97.612

FOR 2016:

52
Net profit to net worth ratio = 90.15/6218.12 X 100
= 1.449

FOR 2015:

Net profit to net worth ratio = 1344.02/5812.38 x 100

= 23.123

FOR 2014:

Net profit to net worth ratio = 494.87/4502.95 X 100

= 10.98

53
FOR 2013:

Net profit to net worth ratio = 570.70/4008.08 X 100

= 14.238

3. WORKING CAPITAL RATIOS:

A. INVENTORY RATIOS:

Inventory Ratio = Net Sales /Inventory

FOR 2017:

Inventory ratio = 10408.41/2264.92

= 4.595

FOR 2016:

Inventory ratio = 10535.30/1660.97

=6.342

FOR 2015:

Inventory ratio = 9474.99/1508.17

= 6.28

FOR 2014:

Inventory ratio = 8556.01/1367.76

= 6.255

FOR 2013:

Inventory ratio = 8556.24/1406.91

54
= 6.081

B. WORKING CAPITAL TURNOVER RATIO:

Working Capital turnover Ratio = Net Sales/ Working Capital Where, working
capital = Current Assets – Current Liabilities FOR 2017:
Working Capital Turnover ratio = 10408.41/389.23
=26.741

55
FOR 2016:

Working Capital Turnover ratio = 10535.30/3347.31

= 3.147

FOR 2015:

Working capital turnover Ratio = 9474.99/4339.8

= 2.183

FOR 2014:

Working capital Turnover ratio = 8556.01/3430.1

= 2.494

FOR 2013:

Working capital Turnover Ratio= 8556.24/3461.53

= 2.471

C. FIXED ASSETS TURNOVER RATIOS:

Fixed Assets Turnover Ratio = Cost of goods sold/ Total fixed Assets

FOR 2017:

Fixed Assets Turnover ratios = 8014.76/2667.15

= 3.00

FOR 2016:

Fixed Assets Turnover ratios = 7361.20/2748.37

= 2.67

FOR 2015:
56
Fixed Assets Turnover ratios = 6734.65/1753.75
= 3.84

FOR 2014:

Fixed Assets Turnover ratios = 6030.14/1613.39

= 3.73

FOR 2013:

Fixed Assets Turnover ratios = 5872.68/1397.82

= 4.201

57
D. CAPITAL TURNOVER RATIO:

Capital turnover ratio = Cost of sales/ capital capital employed

FOR 2017:

Capital turnover ratio = 11021.02/4197.61

= 2.62

FOR 2016:

Capital turnover ratio = 10671.29/6399.08

= 1.66

FOR 2015:

Capital turnover ratio = 9587.06/6093.55

= 1.57

FOR 2014:

Capital turnover ratio = 8519.27/5043.49

= 1.68

FOR 2013:

Capital turnover ratio = 8280.53/4859.32

= 1.7

58
FINAL RATIO REPORT OF FIVE YEARS

ON THE BASIS OF LIQUIDITY RATIO:

2017 2016 2015 2014 2013

1. Current Ratio 1.06 1.64 2.03 1.8 1.86
2. Quick Ratio 0.74 1.35 1.71 1.52 1.54
3. Absolute Liquid Ratio 0.45 1.04 1.29 1.1 1.26

INTERPRETATION OF CURRENT RATIO:

Generally 2:1 is considered as ideal ratio . that is current asset should be twice
of current liabilities.

From the year 2013-15 current ratio is increasing which means company has
enough current asset to meet its day to day obligation, but from the year 2015-
17 current ratio gradually decrease to 1.06 which means difficulties may arise
in paying current liabilities and day to day operation .it implies that company
may be trading beyond its capacity and may require more fund for its smooth
flow of operation.

59
INTERPRETATION OF QUICK RATIO:

Liquid ratio of 1:1 is considered satisfactory.

Quick ratio is decreasing except for the year 2015 but is always having a
greater value than 1 . A high quick ratio indicates that firm is liquid and has the
ability to meet its current or liquid liabilities.

Here decreasing ratio show that firm’s liquidity position is degrading through
the year.

INTERPRETATION OF ABSOLUTE LIQUID RATIO:

The acceptable form for this ratio is 1:2.

In this case ratio is declining at a great pace which means the amount of
absolute liquid asset CCL has is not adequate to pay current liabilities.

ON THE BASIS OF PROFITABILITY RATIO:

2017 2016 2015 2014 2013

1. Gross Profit Ratio 23.68 30.86 28.93 29.59 31.43
2. Operating Cost Ratio 143 130 133 133 132
3. Return on investment Ratio 91 1.45 23.1 10.98 14.23
4. Return on Capital 70.81 1.4 22.05 9.81 11.74
Employed Ratio
5. Earning per Share 0.31 0.0095 0.1429 0.0526 0.060
6. Earning per equity share 0.3162 0.009 0.142 0.052 0.060
7. Net Profit to Net Worth 97.612 1.449 23.123 10.989 14.238
Ratio

60
INTERPRETATION OF GROSS PROFIT RATIO:

Gross profit ratio of CCL has increasing and decreasing trend over the past five
year which implies that profit earning capacity of CCL is increasing and
decreasing over the year with reference to sale.
Higher gross profit is always in the interest of the business.

INTERPRETATION OF OPERATING COST RATIO:

This ratio has an increasing behavior through the last five year except in the
year 2016 . and a higher operating cost ratio is not good for the company as
indicates the increasing cost of production as well as that the major portion of
profit or sales is eaten up by operating cost.

INTERPRETATION OF RETURN ON INVESTMENT RATIO:

This ratio faces a mountainous change in the last five year. From the year
2013-15, there is a slight increase and suddenly there is a gradual and
tremendous decrease in the year 2016 which is followed by a extraordinary
increase in the year 2017 which means that the earning capacity of capital

61
invested first increases till 2015 then decreases and gradually increases in the
year 2017.

ON THE BASIS OF WORKING CAPITAL RATIOS:

2017 2016 2015 2014 2013

1. Inventory Ratio 4.595 6.342 6.28 6.255 6.081
2. Working Capital turnover 26.741 3.147 2.183 2.494 2.471
Ratio
3. Fixed Assets Turnover Ratio 3.00 2.67 3.84 3.73 4.20
4. Capital Turnover Ratio 2.62 1.66 1.57 1.68 1.70

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CONCLUSION

Central coalfields limited (CCL) one of the subsidiary of the Coal India limited
(CIL).

On a final note , We would like to conclude that CCl has a decent financial
management.

Still then, there’s enough room for improvement and further strengthening of
it’s financial position.

By conducting “ RATIO ANALYSIS” of the concern I have observed that the

following areas or items need special attention :

 Proper utilization of Resources.

 Timely using Current Assets.

 Securing the position of Creditors by keeping Secured and Unsecured

lines within a particular limit.

 Increasing return on Capital Assets.

 Average collection period should be minimized.

 Proper utilization of Working Capital.

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During the tenure of our project regarding the subject matter at CCL, we have
come to appreciate the fact it is a unique organization in terms of financial
management in the field of coal mining.

The organization has great potential to run the coal mines in a effective
manner. All employees of the organization are very much supportive. The
organization has high level of financial skills to meet the interest of its creditors
and employees.

Finally we conclude that CCL performance has been pretty satisfactory and
within no time it will achieve great heights.

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BIBLIOGRAPHY

Books & references:-

 M. Y. KHAN and P. K. JAIN,FINANCIAL MANAGEMENT

 I. M. KHAN FINANCIAL MANAGEMENT

Websites:-

 www.google.co.in

 www.cil.nic.in

 www.ccl.gov.in

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