RATIO ANALYSIS

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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


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


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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



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


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.


Company N Mean Std.


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


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


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


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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

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Table 4.8: Liquidity Ratio of selected Allied Companies



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


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.


Company N Mean Std.


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


Between Groups 8.376 2 4.188 5.875 0.006


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


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


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



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


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.


Company N Mean Std.


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


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


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


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


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



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


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.


Company N Mean Std.


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


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


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


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



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


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.


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


Between Groups 0.210 2 0.105 0.358 0.701


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



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


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


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



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


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.


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


Between Groups 1.995 2 .997 .833 .442


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


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


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



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


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.


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


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


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


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



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


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.


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


Between Groups 4.813 2 2.406 1.350 0.270


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



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


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


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



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


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.

106

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.


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


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




obtained. F-value was 1.933 and p-value was 0.157. As p-value in above table was more


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,

107

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


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


108

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

109

Table 4.32: Net Profit Ratio of selected Allied Companies



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


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.

110

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.


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


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




obtained. F-value was 1.103 and p-value was 0.341. As p-value in above table was more


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.

111

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