A

SYNOPSIS

On

PROFITABILITY ANALYSIS

AT

ULTRATECH CEMENT LTD

A Project report submitted to Osmania University in Partial

fulfillment of the requirement for the Award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
B. ALEKHYA
117020672017
RG KEDIA COLLEGE
DEPARTMENT OF BUSINESS MANAGEMENT
(Affiliated to Osmania University, Hyderabad)
CHADARGHAT Hyderabad
Telangana
2020-2022

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 INTRODUCTION

Every firm is most concerned with its profitability. One of the most frequently used tools of

financial ratio analysis is profitability ratios which are used to determine the company's

bottom line and its return to its investors. Profitability measures are important to company

managers and owners alike. If a small business has outside investors who have put their own

money into the company, the primary owner certainly has to show profitability to those

equity investors.

Profitability ratios show a company's overall efficiency and performance. We can divide

profitability ratios into two types: margins and returns. Ratios that show margins represent

the firm's ability to translate sales dollars into profits at various stages of measurement. Ratios

that show returns represent the firm's ability to measure the overall efficiency of the firm in

generating returns for its shareholders.

Profitability ratios measure a company’s ability to generate earnings relative to sales, assets

and equity. These ratios assess the ability of a company to generate earnings, profits and cash

flows relative to some metric, often the amount of money invested.

They highlight how effectively the profitability of a company is being managed.

Common examples of profitability ratios include return on sales, return on investment, return

on equity, return on capital employed (ROCE), cash return om capital invested (CROCI),

gross profit margin and net profit margin. All of these ratios indicate how well a company is

performing at generating profits or revenues relative to a certain metric.

Different profitability ratios provide different useful insights into the financial health and

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performance of a company. For example, gross profit and net profit ratios tell how well the

company is managing its expenses. Return on capital employed (ROCE) tells how well a

company is using capital employed to generate returns. Return on investment tells whether the

company is ignoring enough profits for its shareholders.

For most of these ratio, a higher value is desirable. A higher value means that the company is

doing well and it is good at generating profits, revenues and cash flows. Profitability ratios are

of little value in isolaton. They give meaningful information only when they are analyzed in

comparison to competitors or compared to the ratios in previous periods. Therefore, trend

analysis and industry analysis is required to draw meaningful conclusions about the

profitability of a company.

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

analyzing profitability ratios. For example sales of some businesses are seasonal and they

experience seasonality in their operations. The retail industry is example of such businesses.

The revenues of retail industry are usually very high in the fourth quarter due to Christmas.

Therefore, it will not be useful to compare the profitability ratios of this quarter with the

profitability ratios of earlier quarter should be compared to the profitability ratios of similar

quarter in the previous years.

Financial statements are prepared primarily for decision-making. They play a prominent role

in setting the framework of managerial decisions. But the information provided in the

financial statements is not an end in itself as no meaningful conclusions can be drawn from

these statements alone. However, the information

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

interpretation of financial statements.

will not survive in the long run. So measuring current and past profitability and projecting

future profitability is very important.

Profitability is measured with income and expenses. Income is money generated from the

activities of the business. For example, if crops and livestock are produced and sold, income is

generated. However, money coming into the business from activities like borrowing money

do not create income. This is simply a cash transaction between the business and the lender to

generate cash for operating the business or buying assets.

Expenses are the cost of resources used up or consumed by the activities of the business. For

example, seed corn is an expense of a farm business because it is used up in the production

process. Resources such as a machine whose useful life is more than one year is used up over

a period of years. Repayment of a loan is not an expense, it is merely a cash transfer between

the business and the lender.

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

and expenses during a period of time (usually a year) for the entire business. Decision Tool

Income Statement - Short Form, is used to do a simple income statement analysis. An Income

Statement is traditionally used to measure profitability of the business for the past accounting

period. However, a “pro forma income statement” measures projected profitability of the

business for the upcoming

accounting period. A budget may be used when you want to project profitability for a

particular project or a portion of a business.

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 NEED FOR THE STUDY:

 The problems, which are common to most of the public sectors under taking, are materials

scarcity.

 Thus the importance of the study reveals as to how efficiently the working capital has been

used so far in the organization.

 Profitability Analysis is one of the key areas of financial decision-making. It is significant

because, the management must see that an excessive investment in current assets should

protect the company from the problems of stock-out. Current assets will also determine the

liquidity position of the firm.

 The goal of Profitability Analysis is to manage the firm current assets and current liabilities in

such a way that a satisfactory level of working capital is maintained. If the firm cannot

maintain a satisfactory level of capital, it is likely to become insolvent and may be even forced

into bankruptcy.

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 SCOPE OF THE STUDY:

 The scope of the study is limited to collecting financial data published in the annual reports of

the company every year.

 The analysis is done to suggest the possible solutions.

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

 A study of the Profitability Analysis involves an examination of long term as well as short

term sources that a company taps in order to meet its requirements of finance.

 The scope of the study is confined to the sources that ULTERATECH CEMENTS LTD

tapped over the years under study i.e. 2017-2021.

OBJECTIVES OF THE STUDY:

 To study the Profitability Analysis of the ULTERATECH CEMENTS LTDfor the period of

study of 5 years.

 To analyses interpret and to suggest the Profitability efficiency of the ULTERATECH

CEMENTS LTDby comparing the balance sheet of past 5 years.

 To analyze the financial performance of the ULTERATECH CEMENTS LTD. With the help

of ratios.

 To study the capital employed by the ULTERATECH CEMENTS LTD.

 To study the financial performance of the company with reference to Profitability.

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 RESEARCH METHODOLOGY:

This report is based on secondary data, however secondary data collection was given more

importance since it is overhearing factor in attitude studies. One of the most important users

of research methodology is that it helps in identifying the problem, collecting, analyzing the

required information data and providing an alternative solution to the problem. It also helps

in collecting the vital information that is required by the top management to assist them for

the better decision making both day to day decision and critical ones.

Data sources

The study is based on secondary data.

Secondary method:

The secondary data collection method includes:

 The lecturers delivered by the superintendents of respective departments.

 The brochures and material provided by securities limited.

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

 Various books relating to the investments, capital market and other related topics .

 Secondary data collected from annual reports and also existing manuals and like company

records balance sheet and necessary records.

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 LIMITATIONS OF THE STUDY :

1. The analyst or the user must have comprehensive knowledge and experience

about the concern whose statements have been used for calculating these ratios

only the dependable conclusions may drawn thus ratios are signified tools only

in the hands of experts in the hands of quacks for whom they may prove

dangerous tools.

2. Ratios are not an end in themselves but they are a means to achieve a particular end.

Hence it totally depends upon user or analyst as what conclusions is drawn on

the basis of ratios calculated.

3. A single ratio in itself is not imported or as limited value because trends are

more significant in the analysis.

4. Another limitation is that of standard ratio with which the actual ratios may be

compared generally there is no such ratio, which may be treated as standard for

the purpose of comparison because conditions of one concern differ

significantly from those of another concern.

5. The accuracy and correctness of ratios are totally dependent upon the reliability

of the data contained in financial statements on the basis of which ratios are

calculated.

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 CHAPTERISATION:

CHAPTER-1

INTRODUCTION

SCOPE OF THE STUDY

OBJECTIVES OF THE STUDY

METHODOLOGY OF THE STUDY

LIMITATIONS OF THE STUDY

CHAPTER-2

REVIEW OF LITERATURE

CHAPTER-3

INDUSTRY PROFILE

COMPANY PROFILE

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

CHAPTER-5

SUGGESTION

FINDINGS & CONCLUSION

BIBLIOGRAPHY

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 BIBLIOGRAPHY

BOOKS REFFERED

 Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill Publishing Co., New Delhi,

2007.

 Kishore Ravi M., Financial Management, Published by Allied Services Pvt Ltd., 2004.

 Sharma K. R., Research Methodology, National Publishing House, 2002.

 Anthony, R N and J s Reece, Management Accounting Principles, Taraporewala, Bombay.

JOURNALS AND ARTICLES

 www.bseindia.com

 www.accountlearning.com

 www.banknetindia.com/banking

 www.finance.admin.com

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