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CHAPTER 4
RATIO ANALYSIS AND COMPARISON OF GLASSLINE
VESSELS AND ITS ALLIED COMPANIES IN INDIA
4.1 INTRODUCTION
Ratio analysis is one of the techniques of financial analysis where ratios are used as a
yardstick for evaluating the financial condition and performance of a firm. Analysis and
interpretation of various accounting ratios gives a skilled and experienced analyst, a better
understanding of the financial condition and performance of the firm than what he could
have obtained only through a perusal of financial statements.
The most important task of a financial manager is to interpret the financial information in
such a manner that it can be well understood by the people, who are not well versed in
financial information figures. The technique, by which it is so done, is known as 'Ratio
Analysis.'
The point to be noted is that a ratio reflecting a quantitative relationship helps to form a
qualitative judgment. A comparative study of the relationships between various items of
financial statements reveals the profitability, liquidity, solvency as well as the overall
position of the concern. As ratios are simple to calculate and easy to understand, there is
tendency to employ them profusely. The absolute accounting figures reported in these
financial statements do not provide a meaningful understanding of the performance and
financial position of the concern. An accounting figure conveys meaning when its related
to some other relevant information. Ratios are useful indication of the progress position
and prospects of a business unit in which the many parties are interested in different
ways.
Meaning
Ratios are relationships expressed in mathematical terms between figures, which are
connected with each other in some manner. Obviously, no purpose will be served by
comparing two sets of figures, which are not at all connected with each other. Moreover,
absolute figures are also unfit for comparison.
'Ratio' is relationship between two or more variable expressed in,
1. Percentage,
2. Rate
3. Proportion.
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Ratio analysis is an important technique of financial analysis. It depicts the efficiency or
short-fall of the organization in the form of trend analysis.
4.2 STANDARDS OF COMPARISON
A single ratio in itself does not indicate favorable or unfavorable financial condition. It
should be compared with some standard. Standards of comparison may consist of:
1. Time Series Analysis / Past Ratios
Past ratios are the ratios calculated from the past financial statements of the same firm. By
comparing current years ratios with past ratio the improvement or deterioration in firm's
performance over the period can be studied. It is also known as Time Series Analysis.
2. Cross-sectional Analysis / Competitor's Ratios
Competitors Ratios are ratios of some selected firms, especially the most progressive
competitor, at the same point in time. By comparing firms ratios with competitor's ratios
the firms financial position in respect to competitors can be known.
3. Industry Analysis / Industry Ratios
Industry Ratios are the ratios of industry to which the firm belongs. By comparing firms
ratios with industry average ratios the firm's position vis a vis other firms in the industry
can be understood.
4. Proforma Analysis / Projected Ratios
Projected Ratios are the ratios developed by using the projected financial statements of
the firm. The comparison of current or past ratios with future ratios indicates the firm's
relative strength and weaknesses in the past and in the future.
4.3 PRECAUTIONS TO BE TAKEN WHILE USING RATIOS
1. Standard for Comparison
Ratios have meaning only if they are compared with some standards. Usually it is
recommended that ratios should be compared with industry average, but industry average
data is not easily available in India. Even while comparing ratios with the past ratios
forecast may not be correct since several factors like market conditions, management
policies etc. may affect the future operations.
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2. Price Level Changes
Financial analysis based on accounting ratios will give misleading results if the effects of
changes in price level are not taken into account. The accounting data, presented in
financial statements is assumed to remain constant. In fact, prices change over years
which affect accounting earnings. Therefore, financial statements should be adjusted as
per price level changes. For this current purchasing power and current cost accounting are
quite helpful.
3. Historical Data
The ratios indicate what has happened in the past because it is calculated on the basis of
historical financial statements. Analysts are more interested in future and these ratios may
not necessarily reply the firm's financial position and performance in future.
4. Ratios Alone Are Not Adequate
Ratios are only indicators, they cannot be considered as the final regarding financial
position of the business. Other things also have to be seen. A high current ratio not
necessarily mean sound liquidity position if most of current assets comprise outdated
stocks.
5. Window Dressing
Window dressing means manipulation of accounts in a way so as to conceal vital facts
and present financial statements in a way to show better position than what it actually is.
In this case ratios cannot indicate true situation the quality of ratios depends on accuracy
of accounts.
4.4 IMPORTANCE OF RATIO ANALYSIS
The ratio analysis is the most powerful tool of the financial analysis. It is a quantitative
technique for assessing the financial health of a unit from the accounting data. It helps to
describe the significant relationship between two comparable figures in the financial
statements with the help of Ratios, one can determine.
a. The ability of the firm to meet its current obligations.
b. The extent to which the firm has used its long term solvency by borrowing
funds.
c. The efficiency with which the firm is utilizing its various assets in generating
sales revenue.
d. The overall operating efficiency and performance of the firm.
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It has been realized that the short term and long term financial position and the
profitability of the firm are tested in every kind of financial analysis, the emphasis would
differ. Some ratios are more important in one kind of analysis while other ratios are
important in a different kind of analysis.
Management has to protect the interests of all concerned parties, creditors, owners etc.
They have to ensure some minimum operating efficiency and keep the risk of the firm at
minimum level. Their survival depends upon their operating performance from time to
time management used Ratio Analysis to determine the firms financial strengths and
weaknesses, and accordingly takes actions to improve the firm's position.
4.5 LIMITATIONS OF RATIO ANALYSIS
The ratio analysis is a very useful tool to evaluate the financial position and performance
of a business. The following are some of the limitations of the ratio analysis.
a. It is difficult to find out a proper basis of comparison. Usually, it is recommended that
ratio should be compared with the industry average. But the industry averages are not
equally available.
b. The situations of two companies are never the same. Similarly, the factors influencing
the performance of a company in one year may change in another year. Thus,
comparison of the ratios of two companies becomes difficult.
c. The interpretation and comparison of ratios are also rendered invalid by the changing
value of money. The accenting figures, presented in a financial statement, one
expressed in a monetary unit which is assumed to remain constant, in fact, prices
changes over years and as a result assets acquired at different dates will be expressed
at different rupees in the balance sheet. This makes comparison meaningless.
d. In practice, the difference in the definitions of items in the balance sheet and the
income statement make the interpretation of ratios difficult.
e. The ratios calculated at a point of time are less informative and defective as they
suffer from short term changes.
f. The basis to calculate ratios are historical financial statements. The financial analysis
is more interested in what happens in future, while the ratios, indicate what happened
in the past. The management has information about the company's future plans and
policies and therefore is able to predict future happening to a certain extent. But the
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outside analyst has to rely on the past ratios, which may not necessarily reflect the
firm's financial position and performance in future.
4.6 TYPES OF RATIO ANALYSIS
Several ratios calculated from the accounting data can be grouped into various classes
according to the financial activity or function to be evaluated. The parties which generally
undertake financial analysis all short and long term creditors, owners and management
short term auditors main interest in liquidity position or the short term solvency of the
firm. Long term auditors on the other hand, all are more interested in the long term
solvency and profitability and the analysis of the firms performance. They have to profit
the interest of all parties and see that the firm grows profitably.
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic
use of ratio to interpret the financial statement, so that the strength and weakness of a firm
as well as its historical performance and current financial conditions can be determined.
The term ratio refers to the numerical or quantitative relationship between two items. A
ratio is calculated by dividing one items of relation with other.
Several ratio's calculated from the accounting data can be grouped into various classes
according to the financial activity or function to be evaluated. In the view of the
requirement of the various users of ratio we may classify term in to the following four
important categories.
A. Liquidity Ratio
B. Activity Ratio
C. Profitability Ratio
D. Capital Structure Ratio
A. LIQUIDITY RATIO
The important of adequate liquidity in the sense of ability meet current or short term
obligation when they become due to for payment can hardly be over stressed. In fact,
liquidity is a pre-requisite for the very survived of the firm. The short creditors of the firm
are interested in the short term solvency as liquidity of a firm.
These ratios indicate the position of liquidity. A firm should ensure that it does not suffer
from lack of liquidity and also it does not have excess liquidity lack of liquidity loads will
result in poor credit worthiness. A very high degree liquidity is also had idle asset earn
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nothing. Firms fund will be unnecessarily lied up as current assets. Therefore it is
necessary to stick proper balance between high liquidity and lack of liquidation.
1. Current Ratio
The ratio is used to assess the firms ability to meet its short-term liabilities on time. It is
generally believed that 2:1 ratio shows a comfortable working capital position. However
this rule should not be taken as a hard & fast rule, because ratio that is satisfactory for one
company may not be satisfactory for other. It means that current assets of an organization
should, at least be twice of its current liabilities. The higher the ratio, the better it is.
Current Assets
Current Ratio =
Current Liabilities
Current Assets = Cash & Bank Balance + Stock + Debtors + Bills Receivable + Prepaid
Expenses + Investments readily convertible into cash + Loans and Advances
Current Liabilities = Creditors + Bills Payable + Bank Overdraft + Unclaimed Dividend +
Provision for Taxation + Proposed Dividend]
Table 4.1: Current Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 1.41 100.00 1.21 100.00 1.03 100.00
1997 1.49 105.67 1.15 95.04 2.89 280.58
1998 1.43 101.42 1.29 106.61 3.84 372.82
1999 1.39 98.58 1.28 105.79 3.49 338.83
2000 1.76 124.82 1.17 96.69 3.19 309.71
2001 2.00 141.84 1.10 90.91 2.91 282.52
2002 1.63 115.60 0.97 80.17 2.06 200.00
2003 1.64 116.31 0.92 76.03 1.74 168.93
2004 1.62 114.89 0.93 76.86 1.67 162.14
2005 1.35 95.74 0.94 77.69 1.49 144.66
2006 1.32 93.62 0.96 79.34 1.46 141.75
2007 1.42 100.71 1.02 84.30 1.46 141.75
2008 1.60 113.48 1.08 89.26 1.49 144.66
2009 1.78 126.24 1.09 90.08 1.34 130.10
2010 2.01 142.55 1.05 86.78 1.25 121.36
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
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Chart 4.1: Current Ratio of selected Glassline Companies
It is realized from the table 4.1 and chart 4.1 that the current ratio was showing increasing
trend during 1996-2001 and 2005-2010 for GMM. The same pattern was also seen in
SGEL. NILE shows increasing pattern during 1996-2000 and then decreasing trend was
seen during 2001-2010. In NILE highest current ratio was appeared in 1998-99. Overall
NILE is better than other companies.
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50 Current Ratio
GMM
SGEL
NILE
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Table 4.2: Current Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 1.33 100.00 1.29 100.00 1.40 100.00 1.39 100.00 1.45 100.00 1.29 100.00 1.47 100.00 - - 1.30 100.00 1.19 100.00
1997 1.26 94.74 1.32 102.33 1.36 97.14 1.35 97.12 1.45 100.00 1.03 79.84 1.46 99.32 - - 2.08 160.00 1.15 96.64
1998 1.20 90.23 1.34 103.88 1.42 101.43 1.30 93.53 1.41 97.24 0.86 66.67 1.30 88.44 - - 0.97 74.62 1.22 102.52
1999 1.11 83.46 1.33 103.10 1.59 113.57 1.31 94.24 1.40 96.55 0.92 71.32 1.31 89.12 1.69 100.00 0.63 48.46 1.23 103.36
2000 1.23 92.48 1.28 99.22 1.70 121.43 1.33 95.68 1.51 104.14 0.97 75.19 1.31 89.12 1.84 108.88 0.46 35.38 1.01 84.87
2001 1.22 91.73 1.22 94.57 1.46 104.29 1.18 84.89 1.57 108.28 0.83 64.34 1.27 86.39 1.77 104.73 0.37 28.46 0.80 67.23
2002 1.08 81.20 1.18 91.47 1.22 87.14 1.08 77.70 1.51 104.14 0.79 61.24 1.30 88.44 1.48 87.57 0.31 23.85 0.70 58.82
2003 1.12 84.21 1.12 86.82 1.19 85.00 1.15 82.73 1.37 94.48 1.03 79.84 1.29 87.76 1.17 69.23 0.42 32.31 0.66 55.46
2004 1.20 90.23 1.17 90.70 1.29 92.14 1.13 81.29 1.37 94.48 1.35 104.65 1.25 85.03 1.03 60.95 0.77 59.23 0.75 63.03
2005 1.53 115.04 1.31 101.55 1.36 97.14 1.15 82.73 1.25 86.21 1.41 109.30 1.19 80.95 1.10 65.09 1.00 76.92 0.99 83.19
2006 1.78 133.83 1.37 106.20 1.36 97.14 1.29 92.81 1.20 82.76 1.38 106.98 0.99 67.35 1.03 60.95 1.15 88.46 1.18 99.16
2007 1.59 119.55 1.38 106.98 1.31 93.57 1.26 90.65 1.22 84.14 1.09 84.50 0.98 66.67 0.88 52.07 1.08 83.08 1.36 114.29
2008 1.66 124.81 1.51 117.05 1.28 91.43 1.22 87.77 1.23 84.83 0.91 70.54 1.37 93.20 1.11 65.68 1.03 79.23 1.60 134.45
2009 1.94 145.86 1.76 136.43 0.96 68.57 1.29 92.81 1.25 86.21 0.94 72.87 1.58 107.48 1.25 73.96 0.92 70.77 1.72 144.54
2010 2.20 165.41 1.72 133.33 0.81 57.86 1.34 96.40 1.22 84.14 0.86 66.67 1.53 104.08 1.00 59.17 0.97 74.62 1.77 148.74
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.2 shows the current ratios of selected allied companies in last fifteen years. On an average, current ratio of CUMI and ELECON companies are better than
other allied companies. All companies showed flat trend throughout the study period. In 2010, AWL reported the highest current ratio in comparison to other
selected allied companies.
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Table 4.3: Comparison of Current Ratio between Glassline Companies
H0 : There is no significant difference in mean current ratio between selected companies
H1 : There is significant difference in mean current ratio between selected companies
Descriptive Statistics
Company N Mean Std.
Deviation Std. Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 1.5900 .22071 .05699 1.4678 1.7122
SGEL 15 1.0773 .12337 .03185 1.0090 1.1457
NILE 15 2.0873 .91613 .23654 1.5800 2.5947
Total 45 1.5849 .67918 .10125 1.3808 1.7889
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 7.651 2 3.826 12.707 .000
Within Groups 12.645 42 .301
Total 20.297 44
The table 4.3 shows mean current ratio of selected companies. The descriptive table
shows that mean value of this ratio was higher in NILE company followed by GMM and
SGEL. To check the statistical difference in these mean values researcher had applied
ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values
were obtained. F-value was 12.707 and p-value was 0.000. As p-value in above table was
less than 0.05, above null hypothesis was rejected and concluded that there is a significant
difference in mean Current Ratio between selected companies.
2. Quick Ratio
The measure of absolute liquidity may be obtained by comparing only cash and bank
balance as well as readily marketable securities with liquid liabilities. This is a very
exacting standard of liquidity and it is satisfactory if the ratio is 0.5: 1. It is computed by
dividing the value of quick assets by liquid liabilities. Here, quick assets do not include
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both stock and debtors, because payments from debtors would not generally be received
immediately when liquid liabilities are to be paid. Thus the quick assets comprise only
cash balance, bank balance and readily marketable securities only. Some writers call this
ratio as Absolute Liquidity Ratio, (or Absolute Cash Ratio).
Quick Assets
Quick Ratio =
Liquid Liabilities
Table 4.4: Quick Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 0.19 100.00 0.02 100.00 0.11 100.00
1997 0.10 54.57 0.03 145.71 0.07 67.97
1998 0.66 349.59 0.05 277.72 0.14 126.74
1999 0.22 118.60 0.06 304.78 0.11 104.29
2000 0.22 117.90 0.10 496.31 0.10 90.11
2001 0.24 126.52 0.11 552.35 0.13 116.99
2002 0.22 119.07 0.16 827.03 0.11 99.51
2003 0.57 304.19 0.14 732.38 0.13 113.93
2004 0.07 39.30 0.15 749.62 0.08 73.86
2005 0.04 23.50 0.14 688.91 0.11 97.40
2006 0.05 27.99 0.37 1908.94 0.11 98.82
2007 0.07 37.30 0.33 1671.73 0.09 82.56
2008 0.04 23.08 0.15 740.11 0.13 118.38
2009 0.07 34.76 0.20 1017.24 0.11 97.63
2010 0.09 46.38 0.16 828.57 0.04 34.67
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
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Chart 4.2: Quick Ratio of selected Glassline Companies
It reveals from the table 4.4 and chart 4.2 that the quick ratio of GMM was showing
increasing trend during 1996-2003 and after that it was decreasing. In SGEL, the quick
ratio was showing increasing trend during 1996-2007 and after that it was declined. NILE
shows flat pattern during study period. NILE shows better performance of quick ratio as
compared to other companies and hence it is better.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7Quick Ratio
GMM
SGEL
NILE
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Table 4.5: Quick Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 0.19 100.00 0.19 100.00 0.42 100.00 0.00 100.00 0.04 100.00 0.04 100.00 0.13 100.00 - - 1.06 100.00 0.13 100.00
1997 0.61 314.48 0.18 97.44 0.33 78.93 0.11 3187.09 0.04 104.43 0.04 119.99 0.10 76.53 - - 1.92 180.53 0.06 43.59
1998 0.39 199.89 0.09 46.75 0.50 118.25 0.00 69.08 0.03 70.78 0.07 191.54 0.11 86.07 0.08 100.00 0.68 63.83 0.12 88.11
1999 0.18 92.33 0.09 48.00 0.36 86.61 0.00 50.64 0.02 52.69 0.03 97.95 0.20 150.00 0.06 67.59 0.06 5.64 0.07 53.65
2000 0.22 113.30 0.10 56.12 0.33 77.77 0.00 37.91 0.15 360.59 0.05 145.86 0.06 41.93 0.09 105.18 0.04 3.43 0.08 60.91
2001 0.21 110.45 0.11 58.92 0.19 44.91 0.11 3247.74 0.03 74.96 0.03 92.83 0.06 48.21 0.10 118.46 0.02 1.73 0.14 102.71
2002 0.72 373.30 0.10 55.45 0.37 87.66 0.10 2806.68 0.03 83.95 0.02 68.91 0.21 160.31 0.11 132.74 0.01 1.17 0.09 65.96
2003 0.23 120.00 0.08 42.25 0.30 72.43 0.12 3565.15 0.03 63.83 0.04 105.02 0.05 37.50 0.07 83.18 0.18 16.85 0.11 85.70
2004 0.22 113.91 0.08 43.46 0.35 83.24 0.11 3205.51 0.03 63.67 0.07 203.49 0.99 743.36 0.09 107.56 0.06 6.10 0.46 346.36
2005 1.87 972.45 0.32 169.31 0.17 40.55 0.17 4856.82 0.06 134.12 0.25 722.06 0.24 178.34 0.05 60.16 0.06 5.51 1.28 962.90
2006 0.76 395.34 0.09 50.00 0.33 77.97 0.20 5577.35 0.12 283.32 0.29 831.03 0.08 59.63 0.07 79.01 0.12 11.54 1.19 892.53
2007 0.18 93.73 0.09 47.48 0.39 93.98 0.15 4326.88 0.05 124.18 0.13 357.04 0.49 368.72 0.54 655.12 0.07 6.93 1.78 1336.48
2008 0.29 148.02 0.06 31.94 0.21 49.63 0.40 11369.22 0.02 55.73 0.12 350.02 0.47 354.96 0.13 153.20 0.06 5.82 2.15 1613.68
2009 0.28 146.54 0.09 45.85 0.38 91.73 0.38 10835.37 0.15 363.73 0.20 568.56 0.27 199.27 0.02 25.15 0.04 3.32 2.38 1783.28
2010 0.55 287.63 0.08 41.17 0.06 14.12 0.10 2819.50 0.10 244.24 0.41 1161.11 0.14 102.87 0.02 22.25 0.13 12.09 2.05 1540.00
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.5 shows the quick ratios of selected allied companies in last fifteen years. On an average, quick ratio of SAIL showed best performance among all allied
companies and hence SAIL is the best company among selected allied companies. All other companies showed almost flat trend throughout the study period.
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Table 4.6: Comparison of Quick Ratio between Glassline Companies
H0 : There is no significant difference in mean quick ratio between selected companies.
H1 : There is significant difference in mean quick ratio between selected companies.
Descriptive Statistics
Company N Mean Std.
Deviation Std. Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 0.19 0.18 0.04 0.08 0.29
SGEL 15 0.14 0.09 0.02 0.08 0.19
NILE 15 0.10 0.02 0.00 0.09 0.11
Total 45 0.14 0.12 0.01 0.10 0.18
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 0.055 2 0.027 1.787 0.180
Within Groups 0.643 42 0.015
Total 0.697 44
The table 4.6 shows mean quick ratio of selected companies. The descriptive table shows
that mean value of this ratio was higher in GMM company followed by SGEL and NILE.
To check the statistical difference in these mean values researcher had applied ANOVA
test. In ANOVA table, applying this test corresponding F-value and its p-values were
obtained. F-value was 1.787 and p-value was 0.180. As p-value in the table was more
than 0.05, above null hypothesis was accepted and concluded that there is no significant
difference in mean quick ratio between selected companies.
3. Liquidity Ratio
A variant of current ratio is the liquid ratio or quick ratio which is designed to show the
amount of cash available to meet immediate payments. It is obtained by dividing the
liquid assets by liquid liabilities.
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Liquid assets are obtained by deducting stock in trade from current assets. Stock is not
treated as a liquid asset because it cannot be readily converted into cash as and when
required. The current ratio of a business does not reflect the true liquid position. if its
current assets consist largely of stock in trade.
The liquid liabilities are obtained by deducting bank overdraft from current liabilities.
Bank overdraft is not included in liquid liabilities because bank overdraft is not likely to
be called on demand and is treated as a sort of permanent mode of financing. Hence, it is
not treated as a quick liability.
Liquid Assets
Liquid Ratio =
Liquid Liabilities
Table 4.7: Liquid Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 0.68 100.00 0.55 100.00 1.66 100.00
1997 3.25 479.35 0.33 60.50 3.18 191.00
1998 5.11 752.56 0.52 94.68 2.71 163.14
1999 3.68 542.52 0.79 143.68 2.20 132.53
2000 2.17 319.64 0.97 177.25 2.25 135.55
2001 2.16 317.75 1.44 263.02 2.15 129.24
2002 1.34 196.81 1.05 191.99 2.28 136.98
2003 1.62 239.22 1.17 214.01 2.07 124.24
2004 1.18 173.49 0.86 156.97 1.07 64.18
2005 1.17 171.94 0.75 136.79 0.74 44.45
2006 1.49 218.99 1.42 258.21 1.51 90.81
2007 1.28 189.23 1.39 253.10 1.32 79.20
2008 1.33 196.45 1.28 232.28 1.13 67.77
2009 1.11 162.86 0.85 154.20 0.79 47.54
2010 1.49 219.19 0.60 108.80 0.66 39.51
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
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Chart 4.3: Liquidity Ratio of selected Glassline Companies
It reveals from the table 4.7 and chart 4.3 that the liquidity ratio of GMM was showing
decreasing trend throughout the study period. In SGEL, the liquidity ratio was showing
overall increasing trend during study period. But NILE showed decreasing pattern during
study period. SGEL shows better performance of liquidity ratio as compared to other
companies and hence it is better.
0
1
2
3
4
5
6Liquidity Ratio
GMM
SGEL
NILE
76
Table 4.8: Liquidity Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 1.73 100.00 1.47 100.00 2.43 100.00 1.65 100.00 1.12 100.00 1.15 100.00 3.07 100.00 - - 1.11 100.00 1.07 100.00
1997 3.93 226.87 1.75 119.21 3.24 133.45 1.87 113.06 1.30 116.20 1.15 100.03 2.82 91.84 - - 2.22 199.44 1.05 98.22
1998 1.55 89.51 1.10 74.70 3.97 163.51 1.87 113.11 1.27 113.64 0.70 60.68 3.93 128.30 2.63 100.00 1.56 140.57 1.11 103.72
1999 1.26 72.64 1.19 81.25 3.95 162.68 1.51 91.71 1.43 127.34 1.13 98.62 3.13 102.17 3.06 116.32 0.73 65.95 1.12 104.99
2000 1.43 82.68 1.06 72.26 3.79 156.17 1.25 76.03 1.58 141.25 0.81 70.33 2.15 70.08 2.11 80.39 0.59 53.35 0.75 70.50
2001 1.15 66.57 1.15 78.16 4.09 168.56 1.26 76.09 1.70 151.99 0.70 61.27 2.43 79.19 2.46 93.72 0.53 47.89 0.79 73.91
2002 1.22 70.10 1.02 69.17 3.14 129.49 1.19 72.11 1.38 123.03 0.48 41.76 2.73 89.11 1.96 74.59 0.39 35.35 0.65 60.92
2003 1.11 64.09 0.82 55.98 5.68 234.11 1.18 71.48 1.27 113.30 1.17 101.70 2.45 79.89 1.41 53.71 0.50 44.99 0.79 73.78
2004 1.02 58.80 0.89 60.40 5.47 225.42 1.24 75.42 0.90 80.79 1.09 94.57 4.16 135.63 2.07 78.87 0.68 61.01 1.18 109.93
2005 2.65 152.98 1.67 113.28 5.03 207.17 1.28 77.52 0.96 85.76 1.48 129.06 1.49 48.65 1.46 55.54 1.03 92.27 2.12 197.73
2006 2.34 135.09 2.06 139.97 5.20 214.27 1.36 82.70 1.27 113.38 0.97 84.09 2.48 80.97 1.43 54.20 1.19 107.16 1.81 169.61
2007 1.59 91.89 1.93 131.05 4.04 166.28 1.34 81.08 1.76 157.17 0.62 53.92 2.77 90.39 2.17 82.40 0.88 79.22 2.54 237.71
2008 1.91 110.35 1.53 104.25 2.39 98.63 1.36 82.52 1.69 151.19 0.56 49.03 4.51 147.17 1.59 60.61 0.77 69.50 3.04 284.18
2009 1.58 91.04 1.65 112.33 2.54 104.60 1.32 80.29 1.49 132.77 0.97 83.98 3.88 126.52 1.57 59.67 0.55 49.90 3.19 298.03
2010 2.29 132.27 1.54 104.80 2.02 83.18 1.29 78.42 1.58 141.04 1.23 106.76 2.56 83.38 2.10 79.73 0.84 76.01 2.75 256.86
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.8 shows the liquidity ratios of selected allied companies in last fifteen years. On an average, liquidity ratio of GEE and SAIL showed increasing pattern
whereas all other companies showed almost flat trend throughout the study period. Thus GEE and SAIL are better than other selected allied companies.
77
Table 4.9: Comparison of Liquidity Ratio between Glassline Companies
H0 : There is no significant difference in mean liquidity ratio between selected companies.
H1 : There is significant difference in mean liquidity ratio between selected companies.
Descriptive Statistics
Company N Mean Std.
Deviation Std. Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 1.93 1.19 0.30 1.27 2.59
SGEL 15 0.93 0.35 0.09 0.73 1.12
NILE 15 1.71 0.76 0.19 1.29 2.13
Total 45 1.52 0.93 0.13 1.24 1.80
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 8.376 2 4.188 5.875 0.006
Within Groups 29.939 42 0.713
Total 38.315 44
The table 4.9 shows mean liquidity ratio of selected companies. The descriptive table
shows that mean value of this ratio was higher in GMM followed by NILE and SGEL. To
check the statistical difference in these mean values researcher had applied ANOVA test.
In ANOVA table, applying this test corresponding F-value and its p-values were
obtained. F-value was 5.875 and p-value was 0.006. As p-value in above table was less
than 0.05, above null hypothesis was rejected and concluded that there a is significant
difference in mean liquidity ratio between selected companies.
B. ACTIVITY OR EFFICIENCY RATIO
Funds of creditors and owners are invested in various assets to generate sales and profit.
The better the management of assets, better the amount of sales. Activity ratio is also
called as turnover ratio assets management ratio. They are called turnover ratio because
they indicates the speed with which assets are being converted or turned over in to
78
involves a relationship between sales and assets generally reflects that assets are
managed well.
1. Debtors Turnover Ratio
Ratio of net credit sales to average trade debtors is called debtors turnover ratio. It is also
known as receivables turnover ratio. This ratio is expressed in times.
Accounts receivable is the term which includes trade debtors and bills receivables. It is a
component of current assets and as such has direct influence on working capital position
(liquidity) of the business. Perhaps, no business can afford to make cash sales only thus
extending credit to the customers is a necessary evil. But care must be taken to collect
book debts quickly and within the period of credit allowed. Otherwise chances of debts
becoming bad and unrealizable will increase. How effective or efficient is the credit
collection? To provide answer debtors turnover ratio or receivable turnover ratio is
calculated.
Net Credit Sales
Debtors Turnover Ratio =
Debtors + Bills Receivables
Figure of trade debtors for this purpose should be gross i.e. provision for bad and doubtful
debts should not be deducted from the amount of debtors. Receivables collection period
(also known as average collection period) is calculated and supplemented with the
receivables turnover ratio to help better understanding and communication.
Normally higher the debtors turnover ratio better it is. Higher turnover signifies speedy
and effective collection. Lower turnover indicates sluggish and inefficient collection
leading to the doubts that receivables might contain significant doubtful debts.
Receivables collection period is expressed in number of days. It should be compared with
the period of credit allowed by the management to the customers as a matter of policy.
Such comparison will help to decide whether receivables collection management is
efficient or inefficient.
79
Table 4.10: Debtors Turnover Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 9.71 100.00 45.14 100.00 6.02 100.00
1997 5.67 58.39 14.65 32.45 6.56 108.97
1998 3.05 31.41 9.09 20.14 7.59 126.08
1999 3.41 35.12 6.76 14.98 7.75 128.74
2000 3.50 36.05 4.72 10.46 6.69 111.13
2001 4.22 43.46 4.31 9.55 10.47 173.92
2002 5.16 53.14 4.48 9.92 11.42 189.70
2003 8.43 86.82 6.32 14.00 9.02 149.83
2004 9.01 92.79 6.95 15.40 9.42 156.48
2005 8.47 87.23 8.23 18.23 13.37 222.09
2006 8.34 85.89 7.55 16.73 9.86 163.79
2007 6.56 67.56 7.76 17.19 8.35 138.70
2008 5.91 60.87 6.38 14.13 11.48 190.70
2009 6.10 62.82 6.57 14.55 15.82 262.79
2010 6.22 64.06 11.48 25.43 18.49 307.14
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
80
Chart 4.4: Debtors Turnover Ratio of selected Glassline Companies
It is realized from the table 4.10 and chart 4.4 that in GMM, debtors turnover ratio was
increased during 1998-2004 and decreased in 2005-2010. The almost similar pattern was
seen in SGEL. NILE shows increasing pattern throughout the study period i.e. 1996-2010.
In NILE highest ratio was appeared in 2010. Overall NILE is better than other companies.
0
5
10
15
20
25
30
35
40
45
50 Debtors Turnover Ratio
GMM
SGEL
NILE
81
Table 4.11: Debtors Turnover Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 32.94 100.00 4.29 100.00 6.87 100.00 3.49 100.00 3.49 100.00 1.21 100.00 3.57 100.00 - - 2.00 100.00 8.20 100.00
1997 27.97 84.91 3.54 82.52 6.58 95.78 2.94 84.24 2.71 77.65 2.75 227.27 3.45 96.64 - - 18.40 920.00 7.14 87.07
1998 15.79 47.94 3.51 81.82 5.70 82.97 2.95 84.53 2.30 65.90 3.66 302.48 3.99 111.76 - - 3.75 187.50 7.54 91.95
1999 11.99 36.40 3.03 70.63 4.76 69.29 2.99 85.67 2.83 81.09 3.47 286.78 2.96 82.91 4.86 100.00 2.11 105.50 7.91 96.46
2000 13.13 39.86 2.85 66.43 4.70 68.41 2.75 78.80 2.88 82.52 4.18 345.45 2.60 72.83 2.95 60.70 0.43 21.50 8.70 106.10
2001 16.86 51.18 2.86 66.67 5.05 73.51 2.50 71.63 2.75 78.80 4.39 362.81 2.25 63.03 3.91 80.45 0.40 20.00 9.32 113.66
2002 19.13 58.08 2.51 58.51 4.81 70.01 3.45 98.85 2.47 70.77 4.42 365.29 2.23 62.46 4.59 94.44 2.12 106.00 10.16 123.90
2003 28.74 87.25 3.22 75.06 4.82 70.16 3.51 100.57 2.90 83.09 11.36 938.84 3.51 98.32 6.70 137.86 4.59 229.50 12.63 154.02
2004 24.14 73.28 3.76 87.65 4.99 72.63 3.68 105.44 2.60 74.50 11.86 980.17 6.03 168.91 7.39 152.06 4.17 208.50 15.04 183.41
2005 43.59 132.33 4.07 94.87 5.30 77.15 4.16 119.20 3.76 107.74 15.11 1248.76 10.04 281.23 12.75 262.35 7.63 381.50 18.52 225.85
2006 29.81 90.50 4.12 96.04 5.64 82.10 4.60 131.81 3.09 88.54 13.55 1119.83 13.09 366.67 12.18 250.62 5.89 294.50 17.25 210.37
2007 21.10 64.06 4.46 103.96 5.98 87.05 4.99 142.98 2.79 79.94 16.43 1357.85 10.37 290.48 12.58 258.85 4.95 247.50 18.82 229.51
2008 17.08 51.85 4.11 95.80 5.85 85.15 4.84 138.68 2.11 60.46 26.26 2170.25 14.22 398.32 20.13 414.20 5.94 297.00 17.15 209.15
2009 13.72 41.65 3.70 86.25 5.01 72.93 5.03 144.13 2.14 61.32 33.09 2734.71 13.18 369.19 24.90 512.35 5.53 276.50 16.04 195.61
2010 14.57 44.23 4.19 97.67 5.00 72.78 5.01 143.55 2.28 65.33 25.92 2142.15 9.23 258.54 15.56 320.16 6.03 301.50 13.46 164.15
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.11 shows the debtors turnover ratios of selected allied companies in last fifteen years. During the study period of fifteen years, AWL showed highest
debtors turnover ratio among all selected allied companies. JSPL, ESSAR and SAIL showed an increasing trend throughout the study period.
82
Table 4.12: Comparison of Debtors Turnover Ratio between Glassline Companies
H0 : There is no significant difference in mean debtors turnover ratio between selected
companies.
H1 : There is significant difference in mean debtors turnover ratio between selected
companies.
Descriptive Statistics
Company N Mean Std.
Deviation Std. Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 6.2507 2.16113 .55800 5.0539 7.4475
SGEL 15 10.0260 10.08018 2.60269 4.4438 15.6082
NILE 15 10.1540 3.53474 .91266 8.1965 12.1115
Total 45 8.8102 6.41443 .95621 6.8831 10.7373
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 147.528 2 73.764 1.863 .168
Within Groups 1662.848 42 39.592
Total 1810.375 44
Table 4.12 shows mean debtors turnover ratio of selected companies. The descriptive table
shows that mean value of this ratio was higher in NILE followed by SGEL and GMM. To
check the statistical difference in these mean values researcher had applied ANOVA test.
In ANOVA table, applying this test corresponding F-value and its p-values were obtained.
F-value was 1.863 and p-value was 0.168. As p-value in above table was more than 0.05,
above null hypothesis was accepted and concluded that there is no significant difference in
mean debtors turnover ratio between selected companies.
2. Average Collection Period
The Debtors/Receivable Turnover ratio when calculated in terms of days is known as
Average Collection Period or Debtors Collection Period Ratio.
83
The average collection period ratio represents the average number of days for which a firm
has to wait before its debtors are converted into cash.
365 days
Average Collection Period =
Debtors Turnover
The Average Collection Period ratio measures the quality of debtors. A short collection
period implies prompt payment by debtors. It reduces the chances of bad debts. Similarly,
a longer collection period implies too liberal and inefficient credit collection performance.
It is difficult to provide a standard collection period of debtors.
Table 4.13: Average Collection Period of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 37.59 100.00 8.09 100.00 60.63 100.00
1997 64.37 171.25 24.91 308.12 55.64 91.77
1998 119.67 318.36 40.15 496.59 48.09 79.31
1999 107.04 284.75 53.99 667.75 47.10 77.68
2000 104.29 277.43 77.33 956.36 54.56 89.99
2001 86.49 230.09 84.69 1047.33 34.86 57.50
2002 70.74 188.18 81.47 1007.59 31.96 52.71
2003 43.30 115.18 57.75 714.24 40.47 66.74
2004 40.51 107.77 52.52 649.50 38.75 63.91
2005 43.09 114.64 44.35 548.48 27.30 45.03
2006 43.76 116.43 48.34 597.88 37.02 61.05
2007 55.64 148.02 47.04 581.70 43.71 72.10
2008 61.76 164.30 57.21 707.52 31.79 52.44
2009 59.84 159.18 55.56 687.06 23.07 38.05
2010 58.68 156.11 31.79 393.21 19.74 32.56
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
84
Chart 4.5: Average Collection Period of selected Glassline Companies
It observes from the table 4.13 and chart 4.5 that in GMM, average collection period was
increased during 1996-2000 and decreased during 2001-2010. The similar pattern was
seen in SGEL. NILE showed decreasing pattern throughout the study period i.e.
1996-2010. Among selected companies, NILE showed lowest average collection period
and hence NILE is better than other two selected companies.
0
20
40
60
80
100
120
140Average Collection Period
GMM
SGEL
NILE
85
Table 4.14: Average Collection Period of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 11.08 100.00 85.08 100.00 53.13 100.00 104.58 100.00 104.58 100.00 301.65 100.00 102.24 100.00 - - 182.50 100.00 44.51 100.00
1997 13.05 117.77 103.11 121.19 55.47 104.41 124.15 118.71 134.69 128.78 132.73 44.00 105.80 103.48 - - 19.84 10.87 51.12 114.85
1998 23.12 208.61 103.99 122.22 64.04 120.53 123.73 118.31 158.70 151.74 99.73 33.06 91.48 89.47 - - 97.33 53.33 48.41 108.75
1999 30.44 274.73 120.46 141.58 76.68 144.33 122.07 116.72 128.98 123.32 105.19 34.87 123.31 120.61 75.10 100.00 172.99 94.79 46.14 103.67
2000 27.80 250.88 128.07 150.53 77.66 146.17 132.73 126.91 126.74 121.18 87.32 28.95 140.38 137.31 123.73 164.75 848.84 465.12 41.95 94.25
2001 21.65 195.37 127.62 150.00 72.28 136.04 146.00 139.60 132.73 126.91 83.14 27.56 162.22 158.67 93.35 124.30 912.50 500.00 39.16 87.98
2002 19.08 172.19 145.42 170.92 75.88 142.83 105.80 101.16 147.77 141.30 82.58 27.38 163.68 160.09 79.52 105.88 172.17 94.34 35.93 80.71
2003 12.70 114.61 113.35 133.23 75.73 142.53 103.99 99.43 125.86 120.34 32.13 10.65 103.99 101.71 54.48 72.54 79.52 43.57 28.90 64.92
2004 15.12 136.45 97.07 114.10 73.15 137.68 99.18 94.84 140.38 134.23 30.78 10.20 60.53 59.20 49.39 65.76 87.53 47.96 24.27 54.52
2005 8.37 75.57 89.68 105.41 68.87 129.62 87.74 83.89 97.07 92.82 24.16 8.01 36.35 35.56 28.63 38.12 47.84 26.21 19.71 44.28
2006 12.24 110.50 88.59 104.13 64.72 121.81 79.35 75.87 118.12 112.94 26.94 8.93 27.88 27.27 29.97 39.90 61.97 33.96 21.16 47.54
2007 17.30 156.11 81.84 96.19 61.04 114.88 73.15 69.94 130.82 125.09 22.22 7.36 35.20 34.43 29.01 38.63 73.74 40.40 19.39 43.57
2008 21.37 192.86 88.81 104.38 62.39 117.44 75.41 72.11 172.99 165.40 13.90 4.61 25.67 25.11 18.13 24.14 61.45 33.67 21.28 47.81
2009 26.60 240.09 98.65 115.95 72.85 137.13 72.56 69.38 170.56 163.08 11.03 3.66 27.69 27.09 14.66 19.52 66.00 36.17 22.76 51.12
2010 25.05 226.08 87.11 102.39 73.00 137.40 72.85 69.66 160.09 153.07 14.08 4.67 39.54 38.68 23.46 31.23 60.53 33.17 27.12 60.92
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
The table 4.14 gives the average collection period of selected allied companies in last fifteen years. During the study period of fifteen years, all companies showed
decreasing trend. JSPL, ESSAR and SAIL showed lowest average collection period among all allied companies. Thus these companies seem to be better than
others.
86
Table 4.15: Comparison of Average Collection Period between Glassline Companies
H0 : There is no significant difference in mean average collection period between selected
companies.
H1 : There is significant difference in mean average collection period between selected
companies.
Descriptive Statistics
Company N Mean Std.
Deviation Std. Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 66.45 26.29 6.78 51.88 81.01
SGEL 15 51.01 20.61 5.32 39.59 62.42
NILE 15 39.64 12.06 3.11 32.96 46.32
Total 45 52.37 22.91 3.41 45.48 59.25
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 5430.397 2 2715.199 6.455 0.004
Within Groups 17667.274 42 420.649
Total 23097.671 44
Table 4.15 shows mean Average Collection Period of selected companies. The
descriptive table shows that mean value of this ratio was higher in GMM Company
followed by SGEL and NILE. To check the statistical difference in these mean values
researcher had applied ANOVA test. In ANOVA table, applying this test corresponding
F-value and its p-values were obtained. F-value was 6.455 and p-value was 0.004. As
p-value in above table was less than 0.05, above null hypothesis was rejected and
concluded that there is a significant difference in mean Average Collection Period
between selected companies.
87
3. Total Assets Turnover Ratio
The total asset turnover ratio measures the ability of a company to use its assets to
generate sales. The total asset turnover ratio considers all assets including fixed assets,
like plant and equipment, as well as inventory and accounts receivable.
Net Sales
Total Assets Turnover Ratio =
Total Assts
The lower the total asset turnover ratio, as compared to historical data for the firm and
industry data, the more sluggish the firm's sales. This may indicate a problem with one or
more of the asset categories composing total assets - inventory, receivables, or fixed
assets. The small business owner should analyze the various asset classes to determine
where the problem lies. There could be a problem with inventory. The firm could be
holding obsolete inventory and not selling inventory fast enough. With regard to accounts
receivable, the firm's collection period could be too long and credit accounts may be on
the books too long. Fixed assets, such as plant and equipment, could be sitting idle instead
of being used to their full capacity. All of these issues could lower the total asset turnover
ratio.
Table 4.16: Total Assets Turnover Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 1.54 100.00 0.04 100.00 0.67 100.00
1997 1.24 80.37 0.70 1820.23 0.41 61.52
1998 0.89 57.93 0.66 1732.60 0.36 54.23
1999 0.98 63.93 0.83 2171.63 0.43 63.74
2000 0.75 48.57 0.90 2363.93 0.41 60.61
2001 0.88 57.33 1.08 2837.73 0.42 62.51
2002 0.88 56.95 1.13 2957.45 0.78 115.69
2003 1.15 74.96 1.57 4104.66 0.93 137.86
2004 1.19 77.21 1.97 5168.91 1.14 169.35
2005 1.35 87.70 2.24 5867.97 1.50 223.60
2006 1.60 103.92 1.44 3777.17 1.55 231.13
2007 1.40 90.67 1.34 3497.75 1.71 254.31
2008 1.56 101.46 1.63 4270.20 2.37 351.93
2009 1.71 111.21 1.39 3625.57 1.57 233.33
2010 1.68 109.13 1.50 3923.89 2.21 328.85
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
88
Chart 4.6: Total Assets Turnover Ratio of selected Glassline Companies
From the table 4.16 and chart 4.6, one can interpret that in GMM total assets turnover
ratio was decreased during 1996-2002 and increased during 2003-2010. In SGEL, the
ratio decrease during 1996-2001, increase during 2002-2005 and again decrease. NILE
showed an increasing pattern throughout the study period i.e. 1996-2010. Among selected
companies, NILE showed highest performance of total assets turnover ratio throughout
the study period and hence NILE is better than other two selected companies.
0
0.5
1
1.5
2
2.5Total Assets Turnover Ratio
GMM
SGEL
NILE
89
Table 4.17: Total Assets Turnover Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 2.12 100.00 2.88 100.00 0.83 100.00 - - 1.98 100.00 0.08 100.00 1.29 100.00 - - 0.10 100.00 0.58 100.00
1997 1.81 85.49 2.26 78.41 0.80 96.77 0.96 100.00 1.67 84.61 0.24 293.40 1.29 100.16 - - 0.12 125.32 0.48 82.16
1998 1.60 75.33 2.60 90.31 0.87 105.41 0.90 93.43 1.38 69.78 0.35 422.43 1.08 83.84 - - 0.09 97.90 0.45 77.40
1999 1.87 88.23 2.24 77.82 0.90 108.47 0.91 95.46 1.80 91.22 0.31 375.92 1.01 78.19 14.41 100.00 - - 0.47 81.38
2000 1.66 78.25 2.25 78.01 0.97 116.84 0.87 90.43 1.35 68.54 0.37 447.80 1.03 80.33 13.51 93.76 0.01 9.35 0.70 121.54
2001 1.81 85.42 2.43 84.36 1.05 127.55 0.93 96.89 1.07 53.93 0.41 498.46 - - 10.73 74.49 0.00 1.56 0.76 130.83
2002 1.92 90.32 2.49 86.67 1.04 126.11 0.99 103.04 1.16 58.51 0.62 754.83 1.09 84.49 7.74 53.74 0.01 5.25 0.81 140.52
2003 2.28 107.38 3.04 105.46 1.13 136.96 1.09 113.64 1.36 69.03 0.26 321.82 1.67 129.67 6.50 45.13 0.01 7.09 1.09 188.68
2004 2.16 101.78 3.69 128.35 1.30 156.99 1.21 126.61 1.24 62.72 0.63 768.60 3.17 246.19 5.08 35.23 0.17 179.94 1.55 267.26
2005 2.52 118.86 2.78 96.52 1.30 157.14 1.56 163.25 1.70 85.94 0.94 1148.61 3.51 272.75 3.39 23.55 0.88 920.46 1.78 306.74
2006 2.58 121.70 2.51 87.28 1.20 145.34 1.58 164.44 1.48 74.92 0.55 668.49 3.75 291.30 2.08 14.46 0.93 976.01 1.66 286.83
2007 2.38 111.91 3.31 114.94 1.02 123.36 1.66 173.35 1.58 79.76 0.69 845.55 1.87 145.09 1.60 11.08 0.93 976.97 1.59 273.75
2008 2.15 101.18 3.02 104.83 0.90 108.82 1.65 172.42 1.28 64.66 0.99 1209.71 2.65 205.57 1.26 8.74 1.01 1063.09 1.52 262.92
2009 1.71 80.64 2.58 89.64 0.89 107.77 1.73 180.92 1.10 55.81 0.95 1165.25 2.80 217.64 0.92 6.39 0.77 806.77 1.21 208.75
2010 1.80 84.97 2.60 90.21 1.04 125.37 1.54 161.02 1.26 63.64 0.39 474.92 1.85 143.99 0.63 4.38 0.81 844.09 0.81 140.37
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.17 provides the total assets turnover ratio of selected allied companies in last fifteen years. During the study period of fifteen years, all companies showed
mixed trend. i.e. the ratio was fluctuating throughout the study period. GEE and SAIL showed better performance among all allied companies and hence these
companies seem to be better than others.
90
Table 4.18: Comparison of Total Assets Turnover Ratio between Glassline
Companies
H0 : There is no significant difference in mean total assets turnover ratio between selected
companies.
H1 : There is significant difference in mean total assets turnover ratio between selected
companies.
Descriptive Statistics
Company N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 1.25 0.32 0.08 1.07 1.43
SGEL 15 1.22 0.55 0.14 0.92 1.53
NILE 15 1.09 0.68 0.17 0.71 1.47
Total 45 1.19 0.53 0.07 1.03 1.35
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 0.210 2 0.105 0.358 0.701
Within Groups 12.322 42 0.293
Total 12.532 44
Table 4.18 shows mean total assets turnover ratio of selected companies. The descriptive
table shows that mean value of this ratio was higher in GMM followed by SGEL and
NILE. To check the statistical difference in these mean values researcher had applied
ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values
were obtained. F-value was 0.358 and p-value was 0.701. As p-value in above table was
more than 0.05, above null hypothesis was accepted and concluded that there is no
significant difference in mean total assets turnover ratio between selected companies.
4. Fixed Assets Turnover Ratio
This ratio is also known as the investment turnover ratio. It is based on the relationship
between the cost of goods sold and assets of a firm. It define, measures the efficiency of a
firm in managing and utilizing its assets. The higher the turnover ratio, the more efficient
91
is the management and utilization of the assets while low turnover ratios are indicative of
under utilization of available resources and presence of idle capacity. In operational
terms, it implies that the firm can expand its activity level without requiring additional
capital investments. The fixed asset turnover ratio measures the company's effectiveness
in generating sales from its investments in plant, property, and equipment. It is especially
important for a manufacturing firm that uses a lot of plant and equipment in its operations
to calculate its fixed asset turnover ratio.
Net Sales
Fixed Assets Turnover Ratio =
Net Fixed Assts
If the fixed asset turnover ratio is low as compared to the industry or past years of data for
the firm, it means that sales are low or the investment in plant and equipment is too much.
Table 4.19: Fixed Assets Turnover Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 2.21 100.00 0.63 100.00 1.80 100.00
1997 1.83 82.81 0.96 152.38 0.90 50.00
1998 1.28 57.92 0.91 144.44 0.69 38.33
1999 1.34 60.63 1.08 171.43 0.84 46.67
2000 1.29 58.37 1.23 195.24 0.73 40.56
2001 1.43 64.71 1.48 234.92 0.80 44.44
2002 1.32 59.73 1.49 236.51 1.33 73.89
2003 1.56 70.59 1.93 306.35 1.53 85.00
2004 1.73 78.28 2.49 395.24 1.66 92.22
2005 2.05 92.76 3.16 501.59 2.67 148.33
2006 2.32 104.98 2.65 420.63 3.03 168.33
2007 2.52 114.03 2.22 352.38 3.86 214.44
2008 2.86 129.41 2.39 379.37 5.46 303.33
2009 2.74 123.98 2.38 377.78 4.43 246.11
2010 2.70 122.17 2.07 328.57 4.84 268.89
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
92
Chart - 4.7 : Fixed Assets Turnover Ratio of selected Glassline Companies
From the table 4.19 and chart 4.7, one can say that in GMM, fixed assets turnover ratio
was decreased during 1996-2002 and increased during 2003-2010. In SGEL, the ratio
increase throughout the study period i.e. 1996-2010. NILE also showed an increasing
pattern throughout the study period. Among selected companies, NILE showed highest
performance of fixed assets turnover ratio throughout study period and hence NILE is
better than other two selected companies.
0
1
2
3
4
5
6Fixed Assets Turnover Ratio
GMM
SGEL
NILE
93
Table 4.20: Fixed Assets Turnover Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 3.08 100.00 8.89 100.00 1.38 100.00 4.55 100.00 1.86 100.00 0.16 100.00 1.31 100.00 - - 0.52 100.00 0.98 100.00
1997 2.46 79.87 6.65 74.80 1.41 102.17 3.57 78.46 1.52 81.72 0.39 243.75 1.26 96.18 - - 0.59 113.46 0.78 79.59
1998 1.92 62.34 5.42 60.97 1.41 102.17 3.06 67.25 1.28 68.82 0.47 293.75 1.59 121.37 - - 0.12 23.08 0.68 69.39
1999 1.81 58.77 4.89 55.01 1.30 94.20 2.80 61.54 1.54 82.80 0.39 243.75 1.43 109.16 1.43 100.00 - - 0.59 60.20
2000 1.52 49.35 4.93 55.46 1.28 92.75 2.50 54.95 1.26 67.74 0.38 237.50 1.61 122.90 0.85 59.44 0.01 1.92 0.59 60.20
2001 1.40 45.45 5.44 61.19 1.39 100.72 2.00 43.96 0.99 53.23 0.39 243.75 1.89 144.27 0.95 66.43 0.00 0.00 0.61 62.24
2002 1.18 38.31 4.58 51.52 1.33 96.38 2.26 49.67 0.95 51.08 0.33 206.25 1.99 151.91 0.84 58.74 0.00 0.00 0.58 59.18
2003 1.38 44.81 5.20 58.49 1.31 94.93 2.19 48.13 1.26 67.74 0.53 331.25 2.98 227.48 1.09 76.22 0.01 1.92 0.70 71.43
2004 1.36 44.16 6.18 69.52 1.48 107.25 2.39 52.53 1.26 67.74 0.60 375.00 4.49 342.75 1.03 72.03 0.13 25.00 0.87 88.78
2005 1.93 62.66 6.71 75.48 1.58 114.49 2.83 62.20 2.20 118.28 0.95 593.75 6.43 490.84 1.16 81.12 0.70 134.62 1.15 117.35
2006 2.40 77.92 7.35 82.68 1.68 121.74 3.40 74.73 2.71 145.70 0.79 493.75 7.64 583.21 1.00 69.93 0.72 138.46 1.14 116.33
2007 2.17 70.45 10.04 112.94 1.70 123.19 4.21 92.53 3.74 201.08 0.74 462.50 6.01 458.78 0.95 66.43 0.77 148.08 1.33 135.71
2008 1.88 61.04 10.17 114.40 1.70 123.19 4.38 96.26 3.39 182.26 0.84 525.00 6.38 487.02 1.13 79.02 1.27 244.23 1.51 154.08
2009 1.41 45.78 7.12 80.09 1.48 107.25 4.63 101.76 2.83 152.15 0.85 531.25 6.98 532.82 1.27 88.81 1.04 200.00 1.53 156.12
2010 1.53 49.68 6.73 75.70 1.42 102.90 4.95 108.79 2.41 129.57 0.72 450.00 4.50 343.51 0.98 68.53 1.06 203.85 1.29 131.63
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
The table 4.20 provides the fixed assets turnover ratio of selected allied companies in last fifteen years. During the study period of fifteen years, all companies
showed mixed trend. i.e. the ratio was fluctuating throughout the study period. GEE showed highest performance among all allied companies and hence it seems
to be better than others.
94
Table 4.21: Comparison of Fixed Assets Turnover Ratio between Glassline
Companies
H0 : There is no significant difference in mean fixed assets turnover ratio between
selected companies.
H1 : There is significant difference in mean fixed assets turnover ratio between selected
companies.
Descriptive Statistics
Company N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 1.9453 .57895 .14948 1.6247 2.2659
SGEL 15 1.8047 .75152 .19404 1.3885 2.2208
NILE 15 2.3047 1.64032 .42353 1.3963 3.2130
Total 45 2.0182 1.08986 .16247 1.6908 2.3457
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 1.995 2 .997 .833 .442
Within Groups 50.269 42 1.197
Total 52.263 44
The table 4.21 shows mean fixed assets turnover ratio of selected companies. The
descriptive table shows that mean value of this ratio was higher in NILE followed by
GMM and SGEL. To check the statistical difference in these mean values researcher had
applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its
p-values were obtained. F-value was 0.833 and p-value was 0.442. As p-value in above
table was more than 0.05, above null hypothesis was accepted and concluded that there is
no significant difference in mean fixed assets turnover ratio between selected companies.
5. Working Capital Turnover Ratio
Working capital turnover ratio indicates the velocity of the utilization of net working
capital. This ratio represents the number of times the working capital is turned over in the
course of year and is calculated as follows:
95
Net Sales
Working Capital Turnover Ratio =
Net Working Capital
The two components of the ratio are cost of sales and the net working capital. If the
information about cost of sales is not available the figure of sales may be taken as the
numerator. Net working capital is found by deduction from the total of the current assets
the total of the current liabilities.
The working capital turnover ratio measures the efficiency with which the working
capital is being used by a firm. A high ratio indicates efficient utilization of working
capital and a low ratio indicates otherwise. But a very high working capital turnover ratio
may also mean lack of sufficient working capital which is not a good situation.
Table 4.22: Working Capital Turnover Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 -6.53 100.00 0.74 100.00 3.86 100.00
1997 9.71 -148.61 -5.27 -710.44 1.07 27.77
1998 3.48 -53.25 6.69 902.01 1.04 27.02
1999 4.83 -73.90 50.67 6828.99 1.33 34.42
2000 3.27 -50.00 14.28 1924.86 1.22 31.52
2001 3.16 -48.40 14.29 1926.41 1.35 35.05
2002 7.80 -119.42 -19.79 -2667.77 2.08 53.93
2003 7.35 -112.55 186.44 25129.47 2.30 59.67
2004 31.53 -482.78 -7.09 -955.66 3.84 99.59
2005 -30.65 469.32 -10.11 -1362.98 6.18 160.14
2006 -164.15 2513.20 13.09 1764.72 3.76 97.36
2007 11.29 -172.86 8.13 1095.11 4.11 106.50
2008 8.62 -132.02 18.99 2559.61 5.64 146.15
2009 39.64 -606.97 5.90 795.60 4.89 126.69
2010 7.88 -120.61 -60.35 -8134.31 18.84 488.40
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
96
Chart 4.8: Working Capital Turnover Ratio of selected Glassline Companies
From the table 4.22 and chart 4.8, one can say that in GMM, working capital turnover
ratio was decreasing during 1997-2001 but after that it was increased. It shows ve ratio
in 2005-2006. In SGEL, the ratio gives mixed trend throughout the study period i.e.
1996-2010. NILE also showed an increasing pattern throughout the study period. Among
the selected companies, NILE showed highest performance of working capital turnover
ratio and hence NILE is better than other two selected companies.
-200
-150
-100
-50
0
50
100
150
200
250
Working Capital Turnover Ratio
GMM
SGEL
NILE
97
Table 4.23: Working Capital Turnover Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 7.76 100.00 3.15 100.00 2.56 100.00 2.54 100.00 3.16 100.00 2.40 100.00 2.10 100.00 - - 1.53 100.00 2.11 100.00
1997 7.20 92.72 4.06 129.09 2.40 93.83 2.33 91.58 2.90 91.86 36.85 1535.45 2.34 111.56 - - 3.78 247.56 1.75 83.09
1998 9.26 119.36 3.32 105.47 2.30 89.92 2.34 92.02 3.30 104.31 1.97 81.96 1.68 80.12 2.28 100.00 6.65 434.71 1.99 94.71
1999 7.99 103.02 3.30 104.83 2.51 98.05 2.58 101.45 2.75 86.89 9.67 402.95 1.65 78.48 1.54 67.82 4.19 274.24 6.75 320.44
2000 14.11 181.78 3.45 109.63 2.79 108.89 4.29 168.61 2.11 66.83 -29.4 -1226.5 1.67 79.42 3.00 131.74 -2.00 -130.8 9.21 437.44
2001 45.97 592.38 3.82 121.47 3.39 132.30 3.86 151.91 2.33 73.63 -11.2 -468.13 1.66 78.83 2.84 124.86 -0.22 -14.14 46.24 2196.11
2002 28.41 366.09 6.20 196.99 3.34 130.30 4.18 164.57 2.96 93.46 1.09 45.50 2.46 117.22 8.76 385.15 -0.15 -9.60 -721.5 -34267.9
2003 18.62 239.94 7.57 240.82 3.57 139.39 7.19 283.02 2.23 70.51 2.49 103.63 5.34 254.45 11.32 497.71 2.60 170.22 -28.57 -1356.73
2004 7.88 101.57 4.14 131.50 3.91 152.48 6.93 272.60 2.96 93.72 3.25 135.29 5.03 239.62 8.45 371.26 3.52 230.20 12.30 584.01
2005 8.69 112.02 4.27 135.83 4.09 159.39 7.94 312.30 2.23 70.56 3.42 142.60 8.04 382.80 8.35 367.19 3.04 198.56 8.09 384.21
2006 12.05 155.28 5.26 167.13 3.99 155.52 8.94 351.62 2.21 69.87 6.99 291.21 4.03 192.03 18.64 819.27 4.34 283.70 4.23 200.99
2007 7.36 94.89 5.10 162.00 3.70 144.49 12.66 498.22 1.86 58.98 20.54 855.71 5.01 238.65 4.64 204.03 7.30 477.38 3.44 163.52
2008 5.76 74.20 4.16 132.20 3.36 131.14 9.20 362.00 1.76 55.62 6.56 273.25 4.68 222.68 7.12 312.86 14.23 931.06 2.67 126.58
2009 4.91 63.30 5.38 170.96 4.55 177.68 9.96 392.04 2.24 70.71 3.49 145.37 3.92 186.64 8.00 351.71 5.15 336.64 1.97 93.46
2010 5.10 65.74 3.53 112.22 4.50 175.57 9.81 386.16 2.33 73.60 2.54 105.96 3.88 184.84 3.80 167.15 8.50 555.95 2.22 105.36
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.23 provides the working capital turnover ratio of selected allied companies in last fifteen years. During the study period of fifteen years, GEE showed best
performance among all allied companies and hence it seem to be better than others. ESSAR, JSPL and BBL showed ve values of working capital turnover ratio.
98
Table 4.24: Comparison of Working Capital Turnover Ratio between Glassline
Companies
H0 : There is no significant difference in mean working capital turnover ratio between
selected companies.
H1 : There is significant difference in mean working capital turnover ratio between
selected companies.
Descriptive Statistics
Company N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 -4.18 46.87 12.10 -30.14 21.77
SGEL 15 14.44 53.11 13.71 -14.97 43.85
NILE 15 4.10 4.42 1.14 1.64 6.55
Total 45 4.78 40.77 6.07 -7.46 17.03
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 2612.327 2 1306.163 0.778 0.466
Within Groups 70533.088 42 1679.359
Total 73145.415 44
The table 4.24 shows mean working capital turnover ratio of selected companies. The
descriptive table shows that mean value of this ratio was higher in SGEL followed by
NILE and GMM. To check the statistical difference in these mean values researcher had
applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its
p-values were obtained. F-value was 0.778 and p-value was 0.466. As p-value in above
table was more than 0.05, above null hypothesis was accepted and concluded that there is
no significant difference in mean working capital turnover ratio between selected
companies.
6. Capital Turnover Ratio
Capital turnover ratio establishes a relationship between net sales and capital employed.
The ratio indicates the times by which the capital employed is used to generate sales.
99
It is calculated as follows:
Net Sales
Capital Turnover Ratio =
Capital Employed
Where Net Sales = Sales Sales Return
Capital Employed = Share Capital (Equity + Preference) + Reserves and Surplus + Long-
term Loans Fictitious Assets.
The objective of capital turnover ratio is to calculate how efficiently the capital invested
in the business is being used and how many times the capital is turned into sales. Higher
the ratio, better the efficiency of utilization of capital and it would lead to higher
profitability.
Table 4.25: Capital Turnover Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 3.08 100.00 0.04 100.00 0.93 100.00
1997 1.71 55.49 1.06 2544.53 0.47 50.04
1998 1.11 35.98 0.85 2031.97 0.42 45.09
1999 1.23 39.86 1.14 2737.89 0.50 54.16
2000 0.93 30.22 1.28 3066.70 0.47 50.19
2001 1.11 36.03 1.46 3492.17 0.47 50.36
2002 1.21 39.19 1.89 4515.94 0.90 96.33
2003 1.61 52.28 2.44 5851.39 1.08 115.53
2004 1.64 53.37 5.94 14240.82 1.48 158.88
2005 2.28 73.95 6.76 16199.87 2.28 245.16
2006 2.54 82.49 2.12 5080.35 1.98 212.33
2007 2.15 69.78 2.04 4896.77 2.43 260.63
2008 2.76 89.53 3.00 7190.50 3.33 357.90
2009 3.57 115.77 2.20 5279.38 2.06 220.88
2010 2.71 87.86 2.88 6898.12 4.30 461.53
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
100
Chart 4.9 : Capital Turnover Ratio of selected Glassline Companies
From the table 4.25 and chart 4.9, one can depict that in GMM, capital turnover ratio was
increasing during 1997-2009. In SGEL, the ratio gives highest performance in 2004 and
2005, after that the trend was declined. NILE also showed an increasing pattern
throughout the study period. Among selected companies, GMM showed highest
performance of capital turnover ratio and hence it is better than other two selected
companies.
0
1
2
3
4
5
6
7
8Capital Turnover Ratio
GMM
SGEL
NILE
101
Table 4.26: Capital Turnover Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 2.63 100.00 46.84 100.00 0.94 100.00 - - 5.81 100.00 0.10 100.00 1.53 100.00 - - 0.10 100.00 0.75 100.00
1997 2.01 76.23 6.65 14.20 0.90 95.09 1.40 100.00 4.63 79.66 0.29 292.03 1.57 102.54 - - 0.13 132.48 0.59 78.51
1998 1.98 75.07 330.24 705.12 0.97 102.63 1.26 89.86 3.55 61.16 0.55 551.76 1.24 81.53 - - 0.10 103.77 0.55 73.16
1999 2.48 94.25 28.44 60.73 1.02 108.49 1.26 89.51 4.18 71.98 0.47 471.87 1.23 80.42 0.56 100.00 - - 0.58 77.55
2000 1.95 74.01 -29.57 -63.14 1.12 118.18 1.28 91.58 2.10 36.17 0.59 593.17 1.52 99.38 0.39 68.44 0.01 9.80 0.92 122.82
2001 2.45 92.97 -27.70 -59.15 1.22 128.94 1.42 101.15 1.55 26.61 0.70 697.93 - - 0.50 89.40 0.00 1.63 1.02 136.21
2002 2.86 108.75 -10.52 -22.46 1.18 125.18 1.54 110.11 2.14 36.78 1.48 1480.79 1.47 96.18 0.41 73.53 0.01 5.61 1.13 150.87
2003 3.42 129.89 -4.79 -10.23 1.29 137.12 1.72 122.67 3.01 51.74 0.32 323.92 2.21 144.53 0.60 106.46 0.01 7.86 1.54 204.89
2004 3.04 115.31 -5.23 -11.16 1.52 161.43 2.58 183.67 5.14 88.48 0.81 813.56 4.33 283.59 0.67 118.81 0.23 228.04 2.28 303.35
2005 3.10 117.53 14.11 30.13 1.53 162.58 2.88 205.62 18.52 318.60 1.11 1108.74 4.28 280.27 0.80 142.06 1.12 1127.12 2.53 336.25
2006 3.22 122.09 5.68 12.13 1.40 148.60 3.30 235.04 4.75 81.67 0.70 701.48 5.95 389.55 0.56 99.34 1.15 1159.00 2.40 318.89
2007 3.02 114.68 18.12 38.69 1.20 127.36 3.61 257.63 3.36 57.75 0.99 985.34 2.21 144.57 0.59 103.93 1.50 1513.46 2.12 281.56
2008 2.61 99.25 9.06 19.34 1.03 108.83 3.89 277.64 2.60 44.79 1.41 1410.26 3.20 209.35 0.71 125.25 1.56 1576.53 2.02 268.27
2009 2.14 81.38 5.59 11.94 1.01 107.28 3.64 259.27 2.08 35.88 1.20 1202.80 3.18 208.48 0.74 131.26 1.13 1142.04 1.54 204.90
2010 2.15 81.45 5.95 12.70 1.21 128.37 3.01 214.47 2.31 39.79 0.46 461.84 2.06 134.66 0.49 86.39 1.16 1174.94 1.04 138.52
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.26 gives capital turnover ratio of selected allied companies during the study period. GEE showed highest performance in 2004 & 2005, after that the trend
was declined. SAIL, ESSAR and JSPL showed flat performance whereas BBL showed decreasing trend.
102
Table 4.27: Comparison of Capital Turnover Ratio between Glassline Companies
H0 : There is no significant difference in mean capital turnover ratio between selected
companies.
H1 : There is significant difference in mean capital turnover ratio between selected
companies.
Descriptive Statistics
Company N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 1.97 0.81 0.21 1.52 2.43
SGEL 15 2.34 1.81 0.46 1.33 3.34
NILE 15 1.54 1.17 0.30 0.88 2.19
Total 45 1.95 1.34 0.20 1.54 2.35
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 4.813 2 2.406 1.350 0.270
Within Groups 74.882 42 1.783
Total 79.695 44
The table 4.27 shows mean capital turnover ratio of selected companies. The descriptive
table shows that mean value of this ratio was higher in SGEL followed by NILE and
GMM. To check the statistical difference in these mean values researcher had applied
ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values
were obtained. F-value was 1.350 and p-value was 0.270. As p-value in above table was
more than 0.05, above null hypothesis was accepted and concluded that there is no
significant difference in mean capital turnover ratio between selected companies.
C. PROFITABILITY RATIO
1. Gross Profit Ratio
Gross profit ratio is the ratio of gross profit to net sales i.e. sales less sales returns. The
ratio thus reflects the margin of profit that a concern is able to earn on its trading and
103
manufacturing activity. It is the most commonly calculated ratio. It is employed for inter-
firm and inter-firm comparison of trading results.
Gross Profit
Gross Profit Ratio = x 100
Net Sales
Where Gross profit = Net sales - Cost of goods sold
Cost of goods sold = Opening stock + Net purchases + Direct expenses - Closing stock
Net sales = Sales - Returns inwards
Gross profit is what is revealed by the trading account. It results from the difference
between net sales and cost of goods sold without taking into account expenses generally
charged to the profit and loss account. The larger the gap, the greater is the scope for
absorbing various expenses on administration, maintenance, arranging finance, selling
and distribution and yet leaving net profit for the proprietors or shareholders.
Table 4.28: Gross Profit Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 24.11 100.00 -60.87 100.00 24.30 100.00
1997 19.13 79.35 14.18 -23.30 25.07 103.15
1998 15.25 63.24 12.64 -20.77 20.73 85.28
1999 12.08 50.10 11.58 -19.02 15.18 62.47
2000 10.32 42.79 10.83 -17.79 -1.60 -6.58
2001 8.39 34.80 10.32 -16.96 0.81 3.34
2002 6.80 28.19 10.98 -18.03 5.77 23.74
2003 10.09 41.86 9.65 -15.86 7.29 29.99
2004 15.89 65.91 9.94 -16.33 -8.34 -34.31
2005 16.90 70.08 10.22 -16.79 7.59 31.24
2006 20.18 83.71 11.16 -18.34 8.03 33.05
2007 17.97 74.52 10.12 -16.63 8.06 33.18
2008 17.64 73.16 11.74 -19.28 9.95 40.95
2009 12.96 53.75 8.95 -14.71 -1.04 -4.26
2010 12.73 52.81 10.23 -16.81 4.53 18.66
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
104
Chart 4.10: Gross Profit Ratio of selected Glassline Companies
The table 4.28 and chart 4.10 shows the gross profit ratio of selected companies. From
above table, one can depict that in GMM, gross profit ratio was decreasing during
1996-2002, increase in 2003-2006 and again decrease till 2010. SGEL showed almost
same performance as GMM. NILE showed a decreasing pattern throughout the study
period. Among selected companies, GMM showed highest performance of gross profit
ratio and hence it is better than other two selected companies.
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
Gross Profit Ratio
GMM
SGEL
NILE
105
Table 4.29: Gross Profit Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 17.15 100.00 12.94 100.00 18.13 100.00 - - 7.95 100.00 32.90 100.00 6.79 100.00 - - - - 14.48 100.00
1997 12.73 74.22 9.29 71.80 16.45 90.73 4.49 100.00 8.86 111.56 16.24 49.37 8.96 131.94 - - 2.14 100.00 10.38 71.64
1998 11.64 67.89 0.76 5.88 17.12 94.42 4.09 91.01 10.50 132.13 14.69 44.64 0.61 8.96 - - -260.35 -12147.77 7.36 50.84
1999 10.97 63.97 1.31 10.15 17.37 95.79 4.47 99.44 10.32 129.89 -8.77 -26.67 0.40 5.88 20.82 100.00 - - -3.89 -26.89
2000 9.54 55.62 -1.57 -12.11 20.86 115.09 -5.76 -128.22 6.92 87.15 -11.89 -36.16 1.53 22.56 32.33 155.26 -3526.15 -164525.86 -4.10 -28.30
2001 11.71 68.29 1.47 11.34 18.93 104.43 -2.04 -45.39 5.83 73.43 -4.80 -14.60 - - 31.97 153.53 -22800.00 -1063821.18 2.92 20.16
2002 13.64 79.56 -3.88 -30.02 17.15 94.60 3.40 75.61 4.37 55.04 -45.91 -139.55 2.05 30.14 31.64 151.98 -8665.42 -404318.33 -4.04 -27.87
2003 12.68 73.93 2.17 16.79 23.19 127.92 5.42 120.69 5.79 72.90 12.12 36.84 1.56 23.00 26.87 129.08 9959.57 464702.03 4.92 33.96
2004 12.74 74.32 6.12 47.31 18.85 103.98 7.88 175.48 6.02 75.73 13.43 40.82 1.62 23.91 36.64 175.97 -296.74 -13845.69 17.65 121.83
2005 21.38 124.67 15.34 118.54 20.60 113.64 8.18 182.03 8.91 112.11 19.49 59.24 3.09 45.42 36.86 177.04 -23.60 -1101.21 36.73 253.56
2006 20.53 119.75 17.35 134.13 30.67 169.17 9.39 209.15 11.04 138.95 19.10 58.05 3.95 58.20 36.92 177.32 68.32 3187.76 24.62 169.96
2007 17.13 99.91 18.35 141.81 22.01 121.41 10.37 230.77 13.00 163.64 16.40 49.86 5.38 79.26 36.57 175.63 -13.15 -613.45 31.20 215.38
2008 15.88 92.61 20.53 158.69 27.67 152.62 13.46 299.67 13.68 172.17 14.82 45.04 7.52 110.70 36.51 175.33 82.25 3837.88 31.95 220.55
2009 15.80 92.16 14.77 114.14 17.61 97.16 14.15 315.05 11.53 145.06 9.66 29.36 5.83 85.81 31.74 152.46 -7.03 -327.82 24.74 170.84
2010 18.50 107.87 10.57 81.73 16.19 89.31 18.00 400.73 11.58 145.77 8.14 24.76 11.42 168.15 32.88 157.90 -5.51 -257.09 28.31 195.42
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.29 gives gross profit ratio of selected allied companies during the study period. GEE, SAIL, ESSAR and other companies showed mixed trend during study
period. CG showed increasing trend during 2002-2010. It showed highest performance among all allied companies.
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Table 4.30: Comparison of Gross Profit Ratio between Glassline Companies
H0 : There is no significant difference in mean gross profit ratio between selected
companies.
H1 : There is significant difference in mean gross profit ratio between selected companies.
Descriptive Statistics
Company N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 14.69 4.78 1.23 12.04 17.34
SGEL 15 6.11 18.57 4.79 -4.17 16.39
NILE 15 8.42 9.56 2.47 3.12 13.72
Total 45 9.74 12.63 1.88 5.94 13.53
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 591.994 2 295.997 1.933 0.157
Within Groups 6432.748 42 153.161
Total 7024.741 44
The table 4.30 shows mean gross profit ratio of selected companies. The descriptive table
shows that mean value of this ratio was higher in GMM followed by NILE and SGEL. To
check the statistical difference in these mean values researcher had applied ANOVA test.
In ANOVA table, applying this test corresponding F-value and its p-values were
obtained. F-value was 1.933 and p-value was 0.157. As p-value in above table was more
than 0.05, above null hypothesis was accepted and concluded that there is no significant
difference in mean gross profit ratio between selected companies.
2. Net Profit Ratio
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as
percentage. The two basic components of the net profit ratio are the net profit and sales.
The net profits are obtained after deducting income-tax and, generally, non-operating
expenses and incomes are excluded from the net profits for calculating this ratio. Thus,
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incomes such as interest on investments outside the business, profit on sales of fixed
assets and losses on sales of fixed assets, etc are excluded. It is obtained as follows:
Net Profit After Tax
Net Profit Ratio = x 100
Net Sales
NP ratio is used to measure the overall profitability and hence it is very useful to
proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not
be able to achieve a satisfactory return on its investment.
This ratio also indicates the firm's capacity to face adverse economic conditions such as
price competition, low demand, etc. Obviously, higher the ratio the better is the
profitability. But while interpreting the ratio it should be kept in mind that the
performance of profits also be seen in relation to investments or capital of the firm and
not only in relation to sales.
Table 4.31: Net Profit Ratio of selected Glassline Companies
Year GMM SGEL NILE
Ratio Indices Ratio Indices Ratio Indices
1996 12.60 100.00 -104.35 100.00 19.64 100.00
1997 10.83 85.93 10.28 -9.86 14.75 75.10
1998 8.40 66.68 7.39 -7.08 7.80 39.72
1999 4.53 35.93 7.63 -7.31 3.84 19.55
2000 4.57 36.30 5.91 -5.66 -10.48 -53.37
2001 4.06 32.21 5.97 -5.72 -6.27 -31.92
2002 2.73 21.70 5.05 -4.84 0.76 3.89
2003 4.62 36.70 4.77 -4.57 2.67 13.62
2004 10.59 84.04 5.69 -5.46 -8.97 -45.66
2005 9.49 75.31 5.20 -4.98 4.34 22.11
2006 12.01 95.30 6.15 -5.90 4.59 23.36
2007 10.54 83.65 4.86 -4.66 4.30 21.89
2008 10.96 86.97 6.08 -5.82 5.62 28.62
2009 6.97 55.36 4.26 -4.08 -2.26 -11.50
2010 7.16 56.83 5.37 -5.15 2.24 11.39
Source: Annual Reports of selected Glassline Companies from 1996 to 2010.
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Chart 4.11: Net Profit Ratio of selected Glassline Companies
The table 4.31 and chart 4.11 shows the net profit ratio of selected companies. From
above table, one can say that in GMM, net profit ratio was decreasing during 1996-2003,
increase in 2004-2008 and again decreased. SGEL showed almost same performance as
GMM. NILE showed a decreasing pattern throughout the study period. Among selected
companies, GMM showed highest performance of net profit ratio and hence it is better
than other two selected companies.
-120
-100
-80
-60
-40
-20
0
20
40
Net Profit Ratio
GMM
SGEL
NILE
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Table 4.32: Net Profit Ratio of selected Allied Companies
Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL
Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In
1996 10.07 100.00 6.57 100.00 11.50 100.00 - - 5.71 100.00 24.32 100.00 2.45 100.00 - - -25.00 100.00 10.03 100.00
1997 6.35 63.03 5.16 78.46 9.68 84.24 2.20 100.00 5.07 88.81 0.60 2.48 3.36 137.44 - - -2.50 10.01 4.18 41.66
1998 5.68 56.44 -0.28 -4.27 8.98 78.09 1.47 66.87 5.70 99.84 1.14 4.67 -1.22 -49.76 - - -467.38 1869.50 1.04 10.34
1999 5.01 49.75 0.17 2.57 9.08 79.02 1.48 67.47 4.40 77.06 -25.59 -105.19 -1.60 -65.29 12.46 100.00 - - -11.92 -118.78
2000 3.20 31.78 -2.69 -40.89 11.50 100.07 -9.61 -437.33 2.02 35.42 -27.55 -113.28 -0.38 -15.67 24.29 195.04 -4191.28 16765.14 -12.01 -119.65
2001 3.70 36.71 0.42 6.42 9.32 81.08 -5.77 -262.53 0.24 4.25 -15.55 -63.95 - - 22.60 181.42 -26744.12 106976.47 -5.13 -51.10
2002 5.43 53.89 -3.63 -55.30 8.67 75.38 0.28 12.55 -1.08 -18.87 -41.77 -171.72 0.34 13.96 21.05 169.03 -9930.84 39723.36 -12.51 -124.64
2003 5.52 54.79 1.20 18.29 14.76 128.42 1.85 84.31 1.05 18.41 0.09 0.38 0.22 9.13 16.48 132.27 9088.65 -36354.61 -1.80 -17.95
2004 5.71 56.75 3.62 55.16 11.54 100.39 4.18 190.14 1.31 22.90 1.62 6.66 0.71 28.88 24.26 194.77 -349.97 1399.88 11.82 117.78
2005 12.85 127.59 11.45 174.22 12.34 107.36 5.62 255.97 3.49 61.09 9.68 39.78 1.41 57.51 22.90 183.86 -32.50 129.99 23.86 237.80
2006 15.12 150.13 11.19 170.32 20.60 179.18 6.42 292.00 6.11 107.03 8.59 35.33 2.19 89.37 22.34 179.37 60.43 -241.73 14.29 142.42
2007 11.76 116.83 11.74 178.68 12.64 109.94 5.73 260.72 7.39 129.47 5.45 22.39 2.98 121.96 20.07 161.12 -19.47 77.88 18.19 181.33
2008 8.36 83.06 12.88 195.99 16.56 144.01 8.03 365.59 8.14 142.73 3.97 16.34 4.60 188.07 23.11 185.57 77.97 -311.89 18.95 188.87
2009 5.41 53.70 8.73 132.78 9.08 78.97 8.52 387.97 6.01 105.25 1.58 6.51 3.19 130.42 20.03 160.83 -12.10 48.40 14.29 142.39
2010 9.62 95.58 6.29 95.74 7.86 68.36 11.55 525.59 6.21 108.81 0.21 0.87 7.19 294.11 20.11 161.42 -10.59 42.38 16.67 166.12
Source: Annual Reports of selected Allied Companies from 1996 to 2010.
Table 4.32 gives net profit ratio of selected allied companies during the study period. GEE, SAIL, ESSAR and other companies showed mixed trend during study
period. They reported ve net profit ratios during 1999-2002. CG showed increasing trend during 2002-2010.
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Table 4.33: Comparison of Net Profit Ratio between Glassline Companies
H0 : There is no significant difference in mean net profit ratio between selected
companies.
H1 : There is significant difference in mean net profit ratio between selected companies.
Descriptive Statistics
Company N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
GMM 15 8.00 3.27 0.84 6.19 9.81
SGEL 15 -1.31 28.54 7.36 -17.12 14.49
NILE 15 2.83 7.99 2.06 -1.59 7.26
Total 45 3.17 17.25 2.57 -2.00 8.36
ANOVA test
Source of variation Sum of Squares df Mean Square F p-value
Between Groups 654.028 2 327.014 1.103 0.341
Within Groups 12450.407 42 296.438
Total 13104.435 44
The table 4.33 shows mean Net Profit ratio of selected companies. The descriptive table
shows that mean value of this ratio was higher in GMM followed by NILE and SGEL. To
check the statistical difference in these mean values researcher had applied ANOVA test.
In ANOVA table, applying this test corresponding F-value and its p-values were
obtained. F-value was 1.103 and p-value was 0.341. As p-value in above table was more
than 0.05, above null hypothesis was accepted and concluded that there is no significant
difference in mean Net Profit ratio between selected companies.
3. Return on Capital Employed
The term capital employed refers to long-term funds supplied by the lenders and owners
of the firm. It provides a test of profitability related to the sources of long-term funds. The
higher the ratio, the more efficient is the use of capital employed. It is calculated by
comparing the profit earned and the capital employed to earn it. This ratio is usually in
percentage. It is also known as Rate of Return or Rate on Capital Employed.
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Since the capital employed includes shareholders funds and long-term loans, interest
paid on long-term loans will not be deducted from profits while calculating this ratio.
Net Profit Before Interest & Tax
Return on Capital Employed = x 100
Capital Employed
Capital Employed = Equity Share Capital + Preference Share Capital + All Reserves +P
& L A/c Ba