22-11-2012, 01:10 PM
Jaypee Cement Ltd.
JP CEMENT-report.docx (Size: 13.63 KB / Downloads: 32)
REPORT
In 2004,Jaiprakash Industries Ltd was amalgamated with its wholly owned subsidiary, Jaypee Cement Ltd. and the name of Jaypee Cement Ltd. was changed to Jaiprakash Associates Ltd. after amalgamation. -Jaiprakash Industries Ltd was amalgamated with its wholly owned subsidiary, Jaypee Cement Ltd. and the name of Jaypee Cement Ltd. was changed to Jaiprakash Associates Ltd. after amalgamation.
Ratio and Trend Analysis:
Liquidity Ratio:
Current ratio: The ideal value is 2:1. Here the current ratio is increasing from 2007 to 2010 and is almost same in 2011, so it is an indicator of a good liquidity position of the company and its satisfactory capacity of paying off .
Quick ratio: Ideally, quick ratio should be 1:1.It is increasing every year. Quick ratio is high. It means the company holds more of cash and bank balance and is not paying more of payables.
Leverage Ratio:
Debt-equity ratio: The debt is quite higher than equity. It means capital outlays required are in huge sums. But the ratio is average and within the limits. It shows that the creditors and owners contribution is satisfactory.
Interest coverage ratio: since in 2011 debt has increased which has led to the increase of interest and hence interest coverage has decreased.
Profitability Ratio:
Gross profit margin and Net profit margin: There is high production cost and also the selling price (COGS) is high. Thus the expenditure is high. Hence the gross profit margin and net profit margin is decreasing from 2007 to 2011 due to high costs incurred.
ROI: ROI has been almost the same with little fluctuation. It shows that the company is efficient and getting satisfactory returns on investment.
ROE: ROE initially increased but then decreased. It means that from 2007 to 2010 it was increasing with fluctuations and then gradually declined. It shows that the company’s profitability and productivity has decreased. The reason could be high average cost of debt funds or high tax rates.